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

The board of Commerce Bancshares, Inc. (NASDAQ:CBSH) has announced that it will pay a dividend of $0.27 per share on the 18th of June. This payment means the dividend yield will be 2.0%, which is below the average for the industry.

Check out our latest analysis for Commerce Bancshares

Commerce Bancshares' Earnings Will Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end.

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 29% is a good sign as this means that earnings decently cover dividends.

Looking forward, earnings per share is forecast to rise by 15.7% over the next year. If the dividend continues on this path, the future payout ratio could be 28% by next year, which we think can be pretty sustainable going forward.

Commerce Bancshares Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.526 in 2014 to the most recent total annual payment of $1.08. This works out to be a compound annual growth rate (CAGR) of approximately 7.5% 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.

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. However, Commerce Bancshares has only grown its earnings per share at 4.1% per annum over the past five years. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.

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. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for Commerce Bancshares (1 is significant!) that you should be aware of before investing. 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.