Commerce Bancshares (NASDAQ:CBSH) Is Increasing Its Dividend To $0.27
Commerce Bancshares, Inc. (NASDAQ:CBSH) will increase its dividend from last year's comparable payment on the 27th of March to $0.27. Despite this raise, the dividend yield of 1.5% is only a modest boost to shareholder returns.
Check out our latest analysis for Commerce Bancshares
Commerce Bancshares' Payment Expected To Have Solid Earnings Coverage
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.
Commerce Bancshares has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 26%, which means that Commerce Bancshares would be able to pay its last dividend without pressure on the balance sheet.
Looking forward, EPS is forecast to rise by 16.1% over the next 3 years. The future payout ratio could be 33% over that time period, according to analyst estimates, which is a good look for the future of the dividend.
Commerce Bancshares Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the annual payment back then was $0.538, compared to the most recent full-year payment of $1.01. This implies that the company grew its distributions at a yearly rate of about 6.5% over that duration. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.
The Dividend Looks Likely To Grow
The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Commerce Bancshares has been growing its earnings per share at 11% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
We Really Like Commerce Bancshares' Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for Commerce Bancshares (1 is significant!) that you should be aware of before investing. Is Commerce Bancshares not quite the opportunity you were looking for? Why not check out our selection of top 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.
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