Commerce Bancshares (NASDAQ:CBSH) Will Pay A Dividend Of $0.27

Commerce Bancshares, Inc. (NASDAQ:CBSH) has announced that it will pay a dividend of $0.27 per share on the 25th of March. This means the annual payment will be 2.0% of the current stock price, which is lower than the industry average.

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.

Having distributed dividends for at least 10 years, Commerce Bancshares has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Commerce Bancshares' payout ratio of 28% is a good sign as this means that earnings decently cover dividends.

EPS is set to fall by 10.6% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 37% 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 an extended history of paying stable dividends. Since 2014, the annual payment back then was $0.526, compared to the most recent full-year 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.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Earnings has been rising at 4.3% per annum over the last five years, which admittedly is a bit slow. If Commerce Bancshares is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

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 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. Just as an example, we've come across 2 warning signs for Commerce Bancshares you should be aware of, and 1 of them is significant. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.