Commerce Bancshares (NASDAQ:CBSH) Has Announced A Dividend Of $0.27
Commerce Bancshares, Inc. (NASDAQ:CBSH) has announced that it will pay a dividend of $0.27 per share on the 25th of September. This payment means the dividend yield will be 2.0%, which is below the average for the industry.
View our latest analysis for Commerce Bancshares
Commerce Bancshares' Payment Expected To Have Solid Earnings Coverage
While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.
Commerce Bancshares has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Commerce Bancshares' payout ratio of 26% is a good sign as this means that earnings decently cover dividends.
Looking forward, earnings per share is forecast to fall by 9.1% over the next year. But if the dividend continues along recent trends, we estimate the future payout ratio could be 32%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.
Commerce Bancshares Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of $0.538 in 2013 to the most recent total annual payment of $1.08. This implies that the company grew its distributions at a yearly rate of about 7.2% over that duration. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.
We Could See Commerce Bancshares' Dividend Growing
The company's investors will be pleased to have been receiving dividend income for some time. Commerce Bancshares has seen EPS rising for the last five years, at 7.9% per annum. Commerce Bancshares definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
We Really Like Commerce Bancshares' Dividend
Overall, we like to see the dividend staying consistent, and we think Commerce Bancshares might even raise payments in the future. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Commerce Bancshares that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
