Is Comerica Incorporated (NYSE:CMA) An Attractive Dividend Stock?
Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Historically, Comerica Incorporated (NYSE:CMA) has been paying a dividend to shareholders. Today it yields 2.5%. Does Comerica tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
See our latest analysis for Comerica
How I analyze a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Does it pay an annual yield higher than 75% of dividend payers?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share risen in the past couple of years?
Can it afford to pay the current rate of dividends from its earnings?
Will it be able to continue to payout at the current rate in the future?
How does Comerica fare?
The company currently pays out 22.7% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect CMA’s payout to increase to 31.3% of its earnings, which leads to a dividend yield of 2.3%. Furthermore, EPS should increase to $7.49. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Not only have dividend payouts from Comerica fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
Relative to peers, Comerica has a yield of 2.5%, which is on the low-side for Banks stocks.
Next Steps:
If you are building an income portfolio, then Comerica is a complicated choice since it has some positive aspects as well as negative ones. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three fundamental aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for CMA’s future growth? Take a look at our free research report of analyst consensus for CMA’s outlook.
Valuation: What is CMA worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether CMA is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
