Commerce Bancshares (NASDAQ:CBSH) Has Affirmed Its Dividend Of $0.27

Commerce Bancshares, Inc.'s (NASDAQ:CBSH) investors are due to receive a payment of $0.27 per share on 18th of December. Including this payment, the dividend yield on the stock will be 2.4%, which is a modest boost for shareholders' returns.

View our latest analysis for Commerce Bancshares

Commerce Bancshares' Dividend Forecasted To Be Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

Commerce Bancshares has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Commerce Bancshares' last earnings report, the payout ratio is at a decent 27%, meaning that the company is able to pay out its dividend with a bit of room to spare.

EPS is set to fall by 17.3% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 36% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.

Commerce Bancshares Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was $0.538 in 2013, and the most recent fiscal year payment was $1.08. This implies that the company grew its distributions at a yearly rate of about 7.2% over that duration. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

The Dividend Has Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. Commerce Bancshares has seen EPS rising for the last five years, at 5.8% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Commerce Bancshares Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, Commerce Bancshares has 2 warning signs (and 1 which makes us a bit uncomfortable) we think 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.