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If you are an income investor, then Comerica Incorporated (NYSE:CMA) should be on your radar. Comerica Incorporated, through its subsidiaries, provides various financial products and services. Over the past 10 years, the US$11b market cap company has been growing its dividend payments, from $0.20 to $2.68. Currently yielding 3.9%, let’s take a closer look at Comerica’s dividend profile.
What Is A Dividend Rock Star?
It is a stock that pays a consistent, reliable and competitive dividend over a long period of time, and is expected to continue to pay in the same manner many years to come. More specifically:
- It is paying an annual yield above 75% of dividend payers
- It has paid dividend every year without dramatically reducing payout in the past
- Its has increased its dividend per share amount over the past
- It can afford to pay the current rate of dividends from its earnings
- It is able to continue to payout at the current rate in the future
High Yield And Dependable
The company’s dividend yield stands at 3.9%, which is high for Banks stocks. But the real reason Comerica stands out is because it has a high chance of being able to continue to pay dividend at this level for years to come, something that is quite desirable if you are looking to create a portfolio that generates a steady stream of income.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. CMA has increased its DPS from $0.20 to $2.68 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
Comerica has a trailing twelve-month payout ratio of 28%, which means that the dividend is covered by earnings. Going forward, analysts expect CMA’s payout to increase to 35% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 4.2%. Moreover, EPS should increase to $8.32. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
Comerica’s strong dividend attributes make it, without a doubt, a stock dividend investors should be considering for their portfolios. However, given this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three key factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for CMA’s future growth? Take a look at our free research report of analyst consensus for CMA’s outlook.
- Valuation: What is CMA worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether CMA is currently mispriced by the market.
- Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.