Why Ennis Inc. (EBF) is a Top Dividend Stock

For those that are new to this website, we are running a growth stocks challenge and a dividend stocks challenge that we are doing by adding an extra stock (spending £10) every week. We have already purchased our 9th Growth Stock and now is that time to purchase our 9th Dividend Stock for this challenge, Ennis Inc. (NYSE: EBF).

This leading manufacturer of printed business products has built a reputation for consistent dividends, financial stability, and long-term growth, making it an excellent stock for income-focused investors.

With high-yield dividends, low volatility, and a steady revenue stream, EBF is an attractive option for those seeking passive income and dividend reinvestment opportunities. But is it the right addition to your portfolio? Let’s dive into what makes Ennis Inc. a strong dividend stock.

Why Invest in Ennis Inc. (EBF)?

Ennis Inc. operates in the commercial printing industry, specializing in business forms, labels, envelopes, and promotional printed materials. Despite digitalization trends, Ennis continues to see steady demand for essential business documents, making it a defensive stock with ‘predictable’ revenue.

Key Reasons to Consider EBF:

• Stable Revenue Model: Long-term contracts provide predictable income.
• Strong Financials: The company maintains low debt levels and strong cash flow.
• Recession-Resistant Business: Despite economic downturns, businesses continue to require printed materials.
• High Dividend Yield: Investors benefit from passive income and dividend growth potential.

As of February 20, 2025, EBF stock is trading at $21.02, so with this purchase will be around half of a share that we can get.

Ennis Inc. Dividend Overview

Our £10-a-week Dividend Pie investment challenge aims to build a dividend-focused portfolio with stocks that provide consistent and growing payouts. Ennis Inc. checks all the boxes:

• Annual Dividend: $1 per share
• Dividend Yield: 4.76%
• Quarterly Payouts: Investors receive dividends four times a year of $0.25 each
• Next Ex-Dividend Date: March 2025
• Dividend Payment Date: April 2025

The 4.76% dividend yield is well above the average S&P 500 dividend yield, making EBF an attractive choice for income-seeking investors looking for passive income and dividend reinvestment strategies. If you need to remember, we did a post about when you have to purchase a stock to get the dividend?

Dividend Growth & Sustainability

As usually on this dividend stocks challenge, we as investors should not only look at the current dividend yield but also the company’s ability to maintain and grow its dividend payouts over time. Here’s why Ennis Inc.’s dividend is sustainable in our opinion:

• Strong Free Cash Flow: The company consistently generates solid cash flow, ensuring dividend payments remain stable.
• Sustainable Payout Ratio: At around 68%, Ennis has enough flexibility to continue dividend growth while reinvesting in its business.
• Low Debt Levels: Unlike many high-yield dividend stocks, Ennis has minimal debt, reducing financial risk.
• Consistent Dividend History: Ennis has a long track record of stable dividend payments, reinforcing its commitment to shareholders. The cons however, is that seems quite a slow dividend growth over the recent years as it has kept the same since 2021.

For long-term dividend investors, Ennis Inc. presents a compelling case as a reliable dividend-paying stock.

Is Ennis Inc. a Good Dividend Stock to Buy?

Investing in high-yield dividend stocks requires a balance between dividend income and growth potential. Here’s why EBF stands out as a great dividend investment:

• Reliable Business Model: Demand for printed business products remains steady, even in an evolving digital landscape.
• Passive Income Potential: With a 4.76% dividend yield, EBF provides strong cash flow for reinvestment or income generation. We know that we are using only £10 for this challenge, but that doesn’t mean that it can be purchased elsewhere.
• Dividend Safety: Ennis maintains a conservative payout ratio, making its dividend more secure than many higher-yielding alternatives.
• Undervalued Opportunity: At $21.02 per share, EBF offers an affordable entry point into the dividend investing world, and if you look at their Price / Earnings ratio, is sitting currently at 13.26.

While dividend aristocrats and blue-chip dividend stocks get most of the attention, hidden gems like Ennis Inc. can provide both yield and stability at a reasonable price, they have been paying dividends since 1995 and growing since then, at a low pace though.

Potential Risks to Consider

Before investing in Ennis Inc. (EBF), it’s important to consider potential risks:

• Industry Challenges: The printing industry faces long-term digitalization trends that may reduce demand.
• Market Competition: Ennis competes with digital document management solutions, which could impact growth.
• Economic Sensitivity: A downturn in business spending could slow revenue growth.

While these factors should be monitored, Ennis Inc. remains a stable choice due to its consistent business model, strong cash flows, and dependable dividends.

Ennis Inc. (EBF) Stock Forecast 2025

For those wondering “What is the future of Ennis Inc. stock?”, let’s look at analyst price targets and forecasts:

• 12-Month Price Target: Analysts estimate a price range of $23.00 to $26.00, representing a moderate upside potential.
• Dividend Forecast: Analysts expect EBF to continue its strong dividend payouts, maintaining or slightly increasing its dividend yield.
• Long-Term Outlook: As a low-volatility stock, Ennis Inc. remains a ‘safe haven’ for dividend investors looking for consistent returns.

Should You Buy Ennis Inc. (EBF) Stock?

For long-term dividend investors, EBF is an attractive high-yield stock with:

• Strong dividend sustainability
• A stable and recession-resistant business
• Low debt and strong free cash flow
• Attractive entry price for new investors that like to have full shares, although nowadays that does not matter that much.

Ennis Inc. is a great fit for dividend growth investors, passive income seekers, and long-term wealth builders who want a stable, income-generating stock.

Summarising, why EBF is a Strong Dividend Stock

Ennis Inc. (EBF) is an underrated dividend stock with a strong yield, steady earnings, and financial stability. As part of our £10-a-week Dividend Pie investment challenge, EBF earns a place due to its consistent payouts, low volatility, and attractive valuation. This will fall within the big payers of the portfolio.

Key Takeaways:

• 4.76% dividend yield – higher than most S&P 500 stocks
• Annual payout of $1 per share
• Stock price currently at $21.02
• Reliable business model supporting long-term dividends

For investors building a dividend portfolio for passive income, EBF presents a compelling opportunity to generate stable, long-term returns.

Is Ennis Inc. (EBF) on your watchlist? Let us know what you think!

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Always conduct your own research or consult with a financial advisor before investing.