Commerce Bancshares' (NASDAQ:CBSH) Dividend Will Be $0.27

Commerce Bancshares, Inc.'s (NASDAQ:CBSH) investors are due to receive a payment of $0.27 per share on 25th of March. This means the annual payment will be 2.0% of the current stock price, which is lower than the industry average.

See our latest analysis for Commerce Bancshares

Commerce Bancshares' Earnings Will Easily Cover The Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

Having distributed dividends for at least 10 years, Commerce Bancshares has a long history of paying out a part of its earnings to shareholders. Based on Commerce Bancshares' last earnings report, the payout ratio is at a decent 28%, meaning that the company is able to pay out its dividend with a bit of room to spare.

EPS is set to fall by 11.9% over the next 3 years. Despite that, analysts estimate the future payout ratio could be 36% over the same time period, which is in a pretty comfortable range.

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 $0.526 in 2014 to the most recent total annual payment of $1.03. This works out to be a compound annual growth rate (CAGR) of approximately 6.9% a year over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Earnings have grown at around 4.2% a year for the past five years, which isn't massive but still better than seeing them shrink. While growth may be thin on the ground, Commerce Bancshares could always pay out a higher proportion of earnings to increase shareholder returns.

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 earnings easily cover the company's distributions, and the company is generating plenty of cash. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 2 warning signs for Commerce Bancshares (of which 1 makes us a bit uncomfortable!) you should know about. 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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