Commerce Bancshares (NASDAQ:CBSH) Is Due To Pay A Dividend Of $0.27

Commerce Bancshares, Inc.'s (NASDAQ:CBSH) investors are due to receive a payment of $0.27 per share on 25th of September. The dividend yield is 2.2% based on this payment, which is a little bit low compared to the other companies in the industry.

View our latest analysis for Commerce Bancshares

Commerce Bancshares' Dividend Forecasted To Be Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive.

Commerce Bancshares has established itself as a dividend paying company with over 10 years history of distributing 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.

EPS is set to fall by 9.0% over the next 12 months. But if the dividend continues along recent trends, we estimate the future payout ratio could be 32%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.

Commerce Bancshares Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $0.538 in 2013 to the most recent total annual payment of $1.08. This works out to be a compound annual growth rate (CAGR) of approximately 7.2% 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.

We Could See Commerce Bancshares' Dividend Growing

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 7.9% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Commerce Bancshares' prospects of growing its dividend payments in the future.

Commerce Bancshares Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Commerce Bancshares might even raise payments in the future. 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. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Commerce Bancshares that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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.