Comerica (NYSE:CMA) Will Pay A Dividend Of $0.71

The board of Comerica Incorporated (NYSE:CMA) has announced that it will pay a dividend of $0.71 per share on the 1st of October. This means the annual payment is 5.1% of the current stock price, which is above the average for the industry.

View our latest analysis for Comerica

Comerica's Payment Expected To Have Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Comerica has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Comerica's payout ratio of 63% is a good sign as this means that earnings decently cover dividends.

Looking forward, EPS is forecast to rise by 35.9% over the next 3 years. Analysts forecast the future payout ratio could be 56% over the same time horizon, which is a number we think the company can maintain.

Comerica Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was $0.68, compared to the most recent full-year payment of $2.84. This means that it has been growing its distributions at 15% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Has Limited Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Over the past five years, it looks as though Comerica's EPS has declined at around 10% a year. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

In Summary

Overall, a consistent dividend is a good thing, and we think that Comerica has the ability to continue this into the future. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Comerica that investors should take into consideration. 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.