Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Based in Clayton, Enterprise Financial Services (EFSC) is in the Finance sector, and so far this year, shares have seen a price change of -18.09%. Currently paying a dividend of $0.29 per share, the company has a dividend yield of 2.51%. In comparison, the Banks - Midwest industry's yield is 3.47%, while the S&P 500's yield is 1.68%.
In terms of dividend growth, the company's current annualized dividend of $1.16 is up 9.4% from last year. Over the last 5 years, Enterprise Financial Services has increased its dividend 3 times on a year-over-year basis for an average annual increase of 11.56%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Enterprise Financial Services's payout ratio is 23%, which means it paid out 23% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for EFSC for this fiscal year. The Zacks Consensus Estimate for 2025 is $4.93 per share, which represents a year-over-year growth rate of 1.02%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, EFSC is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Enterprise Financial Services Corporation (EFSC) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.