Updated 3/6/25
Commerce Bancshares, Inc. (NASDAQ: CBSH) is one of those banks that doesn’t always make headlines, but its steady approach to business has made it a reliable choice for investors. Based in Kansas City, this regional bank has been serving customers for over 150 years, offering a mix of retail and commercial banking, wealth management, and investment services.
While it’s not the flashiest stock out there, CBSH has built a strong foundation that appeals to dividend investors looking for stability. It’s the kind of stock that quietly does its job—generating solid earnings, maintaining a conservative balance sheet, and rewarding shareholders with consistent dividends.
Key Dividend Metrics
📌 Dividend Yield – 1.78%
📌 Annual Dividend Per Share – $1.10
📌 Payout Ratio – 26.91% (Well-Covered)
📌 5-Year Average Dividend Yield – 1.69%
📌 Dividend Growth – Slow but Steady
📌 Next Dividend Payment Date – March 25, 2025
📌 Ex-Dividend Date – March 7, 2025
Dividend Overview
If you’re looking for a stock with a sky-high dividend yield, CBSH probably isn’t going to be your top pick. But if you want a dependable company that pays its shareholders year after year without unnecessary drama, this bank is worth a closer look.
With a current yield of 1.78%, CBSH isn’t breaking any records, but it’s more than just the number that makes this stock attractive. The bank has a payout ratio of just under 27%, which means it has plenty of room to continue paying—and even growing—its dividend in the future.
For perspective, many banks tend to distribute around 30% to 50% of their earnings as dividends. CBSH’s lower payout ratio shows a preference for reinvestment, giving it the ability to weather economic downturns while still keeping shareholders happy.
Dividend Growth and Safety
Commerce Bancshares has a long history of rewarding investors with dividends, but it takes a conservative approach. Instead of aggressive hikes, it follows a strategy of slow and steady increases. Over the past five years, the average dividend yield has hovered around 1.69%, which signals consistency rather than volatility.
One of the reasons this dividend is so reliable is the company’s strong profitability. CBSH has a profit margin of over 32% and an ROE of nearly 17%, which are solid numbers for a regional bank. These metrics show that management knows how to turn assets into profits, which ultimately supports its dividend strategy.
For those who prioritize dividend safety over rapid growth, this stock checks the right boxes. The company has remained profitable through various economic cycles, making it a solid long-term pick for income-focused investors.
Chart Analysis
Price Action and Moving Averages
The stock has been on a strong uptrend for most of the past year, but recent price action suggests that momentum is fading. After peaking above 70, CBSH has pulled back and is now hovering around 61.96. The 50-day moving average (orange line), which had been providing support throughout the rally, has now turned into a potential resistance level as the price struggles to stay above it.
The 200-day moving average (blue line) remains in an upward trajectory, signaling that the broader trend is still intact. However, with the stock now trading closer to this long-term support level, a decisive break below it could shift sentiment and invite further downside pressure.
Volume Trends
Recent trading volume has been relatively average, with no major spikes in buying or selling activity. This suggests that while there has been some weakness in price, there hasn’t been a wave of panic selling. However, compared to the strong buying volume seen during last year’s rally, there is a noticeable decline in enthusiasm, which could indicate that buyers are becoming more cautious.
Relative Strength Index (RSI)
The RSI indicator has been trending lower, moving away from overbought levels seen earlier in the rally. Right now, it appears to be in neutral territory, which means the stock isn’t extremely overbought or oversold. If RSI continues to decline and approaches the 30 level, it could signal that the stock is entering oversold territory, which might attract bargain hunters. On the flip side, a failure to bounce could confirm that the downward trend is gaining strength.
Short-Term Price Movement
Looking at the last five candles, the stock has been struggling to hold its ground. The most recent session saw a small gap up at the open, but it ultimately closed near the lower end of the day’s range. This kind of price action suggests that sellers are in control, at least in the short term. The wicks on the last few candles indicate that there is buying interest on dips, but it hasn’t been strong enough to push the price meaningfully higher.
Key Levels to Watch
- The 50-day moving average, now acting as resistance, will be important to watch. If CBSH can break back above it with strong volume, it could signal a potential recovery.
- The 200-day moving average is the next major support level. If the stock falls below this, it could trigger more selling pressure.
- RSI nearing oversold conditions could indicate a possible bounce, but without confirmation from price action, caution is warranted.
Analyst Ratings
⬇️ Downgrades
📉 Raymond James recently adjusted its stance on CBSH, shifting the rating from “Outperform” to “Market Perform.” The reasoning behind this move was that the stock had already run up significantly compared to broader bank indices, making further substantial gains less likely in the short term. Analysts cited valuation concerns, noting that CBSH might be fairly priced after its strong performance over the past year.
⚠️ Morgan Stanley also revised its view, moving CBSH from “Equal-Weight” to “Underweight.” This downgrade was based on concerns surrounding net interest margins in a potentially declining interest rate environment. Analysts pointed out that while CBSH has historically been a well-managed bank, it might not be the best-positioned financial institution to benefit from lower rates and increased capital market activity.
⬆️ Upgrades
💡 Keefe, Bruyette & Woods provided a more optimistic outlook, raising their price target to $78.00. Analysts highlighted CBSH’s strong return on equity (ROE) and stable earnings growth as key drivers for the upgrade. The firm’s solid balance sheet and ability to navigate economic fluctuations were noted as reasons why CBSH could continue to perform well in the coming year.
🔎 Another upgrade came from an independent research firm, which maintained a “Buy” rating on CBSH, citing consistent dividend payouts and conservative financial management. The firm emphasized the bank’s ability to generate stable revenue in a shifting economic landscape, making it a favorable pick for long-term investors looking for steady returns.
🎯 Consensus Price Target
📌 The latest analyst consensus puts CBSH’s 12-month average price target at approximately $71.33, with a range between $70.00 and $74.00. This suggests a potential upside of about 11.48% from the stock’s current price.
🔄 Overall, the consensus rating remains “Hold,” reflecting a balanced mix of bullish and cautious sentiment among analysts. While CBSH is recognized for its strong fundamentals, valuation concerns and macroeconomic conditions are keeping some firms from issuing outright buy recommendations at this time.
Earnings Report Summary
Commerce Bancshares wrapped up its latest quarter with a solid earnings report, showing steady growth and strong financial health. The bank’s ability to navigate changing market conditions continues to be a key strength, and this quarter’s numbers reflect that stability.
Earnings and Revenue Growth
The bank posted earnings per share of $1.01, up from $0.79 a year ago, which is a healthy increase. Net income climbed to $136.1 million, marking a solid 24.6% jump from last year’s quarter. That kind of earnings growth is always a positive sign, especially in an environment where interest rates and banking conditions remain unpredictable.
Interest Income and Margins
Commerce Bancshares’ net interest income came in at $266.6 million, a slight increase from the previous quarter. The net interest margin, which measures how much the bank makes on loans compared to what it pays on deposits, dipped just a bit to 3.49%. That’s not a huge shift, but it does show the bank is feeling some of the pressure from rate fluctuations.
Non-Interest Income and Fee Growth
Beyond traditional banking revenue, Commerce saw a nice bump in non-interest income, which reached $155.4 million. A big driver of that was trust fees, which grew by 14.6%, thanks to strong demand for private client services. This side of the business is becoming increasingly important as banks look for ways to generate revenue outside of lending.
Keeping Costs in Check
One of the standout numbers in the report was the drop in expenses. The bank managed to cut non-interest expenses by 6.2%, bringing the total down to $235.7 million. A big part of that came from lower deposit insurance costs, which is a welcome development since rising expenses have been a challenge for many banks lately.
Loan and Deposit Trends
Loan balances stayed steady at around $17.1 billion, with only a small 0.3% uptick. Deposits, on the other hand, saw stronger growth, rising by 2.4% from the last quarter. Customers are still parking their money with Commerce, which is always a good sign for a bank’s long-term stability.
Strong Asset Quality and Capital Position
The bank’s asset quality remains solid, with non-accrual loans (loans that aren’t generating interest) holding steady at 0.11% of total loans. That’s a sign that Commerce isn’t dealing with a surge in bad loans. Meanwhile, total assets grew to $32 billion, and book value per share climbed 14.5% over the past year.
Overall, Commerce Bancshares delivered another quarter of steady performance. Strong earnings, controlled costs, and stable loan quality suggest the bank is well-positioned heading into the next quarter.
Financial Health and Stability
When investing in banks, it’s important to look beyond just dividend numbers. CBSH is in good financial shape, with a strong cash position of $4.1 billion. This provides flexibility and ensures it can meet obligations even if market conditions get rough.
From a growth perspective, revenue increased by 3.7% year-over-year, while earnings jumped by nearly 25% in the same period. That’s the kind of growth that reinforces dividend stability. Its return on assets (ROA) of 1.68% is also impressive for a bank of its size, showing that it is efficiently managing its resources.
The only slight concern is its total debt of $2.98 billion. While not alarming, it’s something to watch, especially if interest rates remain volatile. For now, the balance sheet looks healthy, and there are no immediate red flags.
Valuation and Stock Performance
CBSH is currently trading at $61.10, with a trailing P/E of 16.00 and a forward P/E of 16.64. These numbers suggest the stock isn’t overvalued, but it’s also not a bargain. It’s fairly priced for what it offers—steady earnings and a dependable dividend.
Over the past year, CBSH’s stock price has ranged between $47.89 and $72.75. Right now, it’s sitting closer to its longer-term support levels, with the 50-day moving average at $64.67 and the 200-day moving average at $60.42. That puts it in an interesting position for investors who like buying quality stocks on slight dips.
Another metric worth noting is the price-to-book ratio of 2.51. That’s a bit higher than some of its regional banking peers, meaning investors are paying a slight premium for CBSH’s stability.
Risks and Considerations
No stock is without risk, and CBSH is no exception. Here are a few things to keep in mind before investing:
🔻 Interest Rate Sensitivity – Like all banks, CBSH’s profitability depends on interest rate trends. If rates drop too much, its earnings could take a hit.
🔻 Regional Exposure – Since CBSH is a regional bank, it is more affected by the Midwest economy. A slowdown in that region could impact growth.
🔻 Slow Dividend Growth – While CBSH is reliable, it isn’t a high-growth dividend stock. Investors looking for stronger dividend increases may need to look elsewhere.
🔻 Valuation Premium – The stock isn’t expensive, but it isn’t cheap either. Investors should consider whether they’re comfortable paying a bit more for its consistency.
Final Thoughts
Commerce Bancshares may not be the most exciting stock, but for investors looking for a stable, well-managed bank with a reliable dividend, it fits the bill. The company’s low payout ratio, strong balance sheet, and steady earnings make it a solid choice for those who value consistency over high yields.
While the dividend growth isn’t rapid, the bank’s ability to sustain and gradually increase payouts makes it attractive for long-term income investors. If you want a dependable, low-volatility stock that offers steady income without surprises, CBSH is worth considering.
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