Comerica's (NYSE:CMA) Dividend Will Be $0.71

The board of Comerica Incorporated (NYSE:CMA) has announced that it will pay a dividend on the 1st of July, with investors receiving $0.71 per share. This makes the dividend yield 5.2%, which will augment investor returns quite nicely.

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Comerica's Dividend Forecasted To Be Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much.

Having distributed dividends for at least 10 years, Comerica has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 53%, which means that Comerica would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, EPS is forecast to rise by 10.7% over the next 3 years. Analysts forecast the future payout ratio could be 49% over the same time horizon, which is a number we think the company can maintain.

See our latest analysis for Comerica

Comerica Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the annual payment back then was $0.80, compared to the most recent full-year payment of $2.84. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

Comerica May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. Unfortunately things aren't as good as they seem. However, Comerica's EPS was effectively flat over the past five years, which could stop the company from paying more every year.

Our Thoughts On Comerica's Dividend

Overall, a consistent dividend is a good thing, and we think that Comerica has the ability to continue this into the future. While the payments look sustainable for now, earnings have been shrinking so the dividend could come under pressure in the future. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Without at least some growth in earnings per share over time, the dividend will eventually come under pressure either from competition or inflation. Very few businesses see earnings consistently shrink year after year in perpetuity though, and so it might be worth seeing what the 17 analysts we track are forecasting for the future. 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.