Why Enterprise Financial Services (EFSC) is a Top Dividend Stock for Your Portfolio

All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.Cash flow can come from bond interest, interest from other types of investments, and, of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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 5.8%. Currently paying a dividend of $0.30 per share, the company has a dividend yield of 2.08%. In comparison, the Banks - Midwest industry's yield is 3.08%, while the S&P 500's yield is 1.51%.Looking at dividend growth, the company's current annualized dividend of $1.24 is up 17% from last year. Over the last 5 years, Enterprise Financial Services has increased its dividend 4 times on a year-over-year basis for an average annual increase of 11.88%. 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. Enterprise Financial Services's current payout ratio is 23%, meaning it paid out 23% of its trailing 12-month EPS as dividend.Looking at this fiscal year, EFSC expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $5.39 per share, which represents a year-over-year growth rate of 10.45%.Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide a quarterly payout.High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that EFSC is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).3 Stocks Poised to Lead the AI Software RaceThe software market is expected to witness a remarkable growth trajectory worldwide. Advancements in AI, increased demand for cybersecurity, and the rapid expansion of automation and robotics is offering investors an opportunity to unlock significant growth right now.Which software stocks will soar? Which will fizzle out? Find out in our urgent special report, Software is Eating the World. It examines where the software industry stands now and reveals three favorite software stocks to ownAccess the report free today >>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 ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks