Commerce Bancshares (NASDAQ:CBSH) Has Affirmed Its Dividend Of US$0.26

Commerce Bancshares, Inc.'s (NASDAQ:CBSH) investors are due to receive a payment of US$0.26 per share on 23rd of September. This payment means the dividend yield will be 1.5%, which is below the average for the industry.

View our latest analysis for Commerce Bancshares

Commerce Bancshares' Earnings Easily Cover the Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Before making this announcement, Commerce Bancshares was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to fall by 16.2% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 29%, which is comfortable for the company to continue in the future.

Commerce Bancshares Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The first annual payment during the last 10 years was US$0.55 in 2011, and the most recent fiscal year payment was US$1.05. This implies that the company grew its distributions at a yearly rate of about 6.7% over that duration. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Commerce Bancshares has impressed us by growing EPS at 18% per 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

Overall, we like to see the dividend staying consistent, and we think Commerce Bancshares might even raise payments in the future. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. For example, we've picked out 1 warning sign for Commerce Bancshares that investors should know about before committing capital to this stock. We have also put together a list of global stocks with a solid dividend.

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