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Enterprise Financial Services Corp Preferred Stock Yield Surges

Shares of Enterprise Financial Services Corp's preferred stock yield surpass 7%, driven by a significant market discount. This warrants investor attention regarding dividend risks and potential returns.

Date: 
AI Rating:   6

**Analysis of Enterprise Financial Services Corp's Preferred Shares**

Enterprise Financial Services Corp's preferred shares are currently yielding above the 7% mark, which is favorable when compared to an average yield of 6.73% in the Financial preferred stock category. This high yield can attract dividend-seeking investors, especially in a market with low bond yields. However, it's important to highlight that these shares are considered non-cumulative, indicating that any missed dividend payments do not need to be compensated by the company before it resumes common stock dividends. This feature introduces additional risk for investors, as a missed payment would not guarantee future payouts.

The stock is trading at a substantial discount of 28.20% to its liquidation preference compared to the average discount of 12.18% in the sector. Such a significant discount suggests concerns about the company's ability to fulfill its obligations or a general market sentiment that may perceive heightened risk in this investment.

Currently, the preferred shares are showing a modest gain of 1.5% for the day, alongside a 1.9% increase in the common shares. While this might indicate some positive market reaction, it’s crucial to assess the broader implications of the dividend policy and fluctuations in the preferred stock market. Investors should also consider that, if they invest now, future quarters may bring uncertainties regarding dividend payments, hence affecting share valuations.

Stocks:  EFSC