Commerce Bancshares (NASDAQ:CBSH) Has Affirmed Its Dividend Of $0.275

Commerce Bancshares, Inc. (NASDAQ:CBSH) has announced that it will pay a dividend of $0.275 per share on the 24th of June. This means the annual payment will be 1.8% of the current stock price, which is lower than the industry average.

Our free stock report includes 1 warning sign investors should be aware of before investing in Commerce Bancshares. Read for free now.

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.

Having distributed dividends for at least 10 years, Commerce Bancshares has a long history of paying out a part of its earnings to shareholders. 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.

Over the next 3 years, EPS is forecast to expand by 10.7%. Analysts forecast the future payout ratio could be 28% over the same time horizon, which is a number we think the company can maintain.

View our latest analysis for Commerce Bancshares

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. Since 2015, the annual payment back then was $0.526, compared to the most recent full-year payment of $1.10. This works out to be a compound annual growth rate (CAGR) of approximately 7.7% a year over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

Commerce Bancshares Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Commerce Bancshares has grown earnings per share at 9.9% per year over the past five years. 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. 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.

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. Taking the debate a bit further, we've identified 1 warning sign for Commerce Bancshares that investors need to be conscious of moving forward. 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.