The board of Commerce Bancshares, Inc. (NASDAQ:CBSH) has announced that it will pay a dividend on the 24th of June, with investors receiving $0.275 per share. This payment means the dividend yield will be 1.8%, which is below the average for the industry.

We've discovered 1 warning sign about Commerce Bancshares. View them for free.

Commerce Bancshares' Earnings Will Easily Cover The Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

Commerce Bancshares 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 Commerce Bancshares' payout ratio of 26% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 10.7%. The future payout ratio could be 28% over that time period, according to analyst estimates, which is a good look for the future of the dividend.NasdaqGS:CBSH Historic Dividend April 28th 2025

Check out our latest analysis for Commerce Bancshares

Commerce Bancshares Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2015, the dividend has gone from $0.526 total annually to $1.10. This works out to be a compound annual growth rate (CAGR) of approximately 7.7% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

We Could See Commerce Bancshares' Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Commerce Bancshares has been growing its earnings per share at 9.9% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Commerce Bancshares Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Commerce Bancshares that you should be aware of before investing. Is Commerce Bancshares not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.

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