Dividend Growth Stock Overview: Commerce Bancshares, Inc.

Commerce Bancshares serves individuals, institutions and businesses in the Midwest.
Photo courtesy Consumerist Dot Com/flickr.com.

About Commerce Bancshares Inc.

Commerce Bancshares is a regional bank holding company serving customers in the midwestern region of the United States. The company, which was founded as the Kansas City Savings Association in 1865, is headquartered in Kansas City, Missouri, has 350 locations – including 195 bank branches – in Kansas, Missouri, Illinois, Oklahoma and Colorado. With more than $24 billion in assets, Commerce Bancshares was in the top 50 of banks by size in the United States. Its two largest markets are St. Louis and Kansas City, MO, where the company has roughly 15% and 10% of the market share of total deposits, respectively. Each of these two cities also account for more than 25% of the company’s total loan portfolio.

Commerce Bancshares provides a diversified line of financial services to individuals, businesses and institutions, and has organized its business along three operating segments: the Consumer, Commercial and Wealth Segments.

The Consumer Segment operates Commerce Bancshares retail branch network and is responsible for all lending services to individual consumers, including mortgages, debit and credit bank cards, and installment loans.

The Commercial Segment is responsible for initiating loans to businesses, and for the operation of merchant and commercial bank card products. In addition, all fixed income investment sales to individual and institutional investors falls under the Commercial Segment. Overall, this segment generates about 60% of Commerce’s pre-tax.

Finally, the Wealth Segment provides trust and estate tax planning services, brokerage services and investment portfolio management services to high-net-worth customers. This segment also manages Commerce’s line of proprietary mutual funds. The company has more than $22 billion in assets under management.

The company is a member of the S&P Mid Cap 400 index and S&P’s High Yield Dividend Aristocrats index, and trades under the ticker symbol CBSH.

Commerce Bancshares’ Dividend and Stock Split History

Commerce Bancshares Dividends

Commerce has grown its dividend at an average rate of 3.8% over the last decade. This does not include the effect of the annual 5% stock dividend issued since 1994.

Commerce Bancshares has grown its dividend payout year-over-year since 1969. In most cases, the annual dividend increase comes in the form of a 5% stock dividend, which the company has done since 1994. In some years, Commerce Bancshares also announces an increase in the cash dividend. The company pays the stock dividend in mid-December and announces the cash dividend increase at the beginning of February, with the stock going ex-dividend at the beginning of March. The company did not announce an increase in the cash dividend in 2016, but did issue the 5% stock dividend. I expect Commerce to announce its 23rd consecutive 5% stock dividend in December 2016 and its 49th consecutive cash dividend increase in February 2017.

Looking at just the cash dividends, since 2008 Commerce has increased the dividend in the low to mid-single digit percentages. Prior to that, the dividend increases ranged from 6.5% to 14%, with a couple of years of 20% – plus increases. This gives Commerce 5-year and 10-year compounded annual dividend growth rates of 8.70% and 8.79%, respectively. Over the last 25 years, Commerce’s CADGR is 12.20%.

In addition to the stock dividends, Commerce Bancshares has split its stock three times since beginning its record of annual dividend growth. In May 1989, the company split the stock 2-for-1, and in June 1993 and March 1998, the company split the stock 3-for-2. The net effect of these three splits was to increase the number of shares held by a factor of 4.5.

Over the 5 years ending on December 31, 2015, Commerce Bancshares stock appreciated at an annualized rate of 8.48%, from a split-adjusted $28.04 to $42.13. This underperformed both the 10.2% annualized return of the S&P 500 and the 9.0% annualized return of the S&P Mid Cap 400 index during this time.

Commerce Bancshares’ Direct Purchase and Dividend Reinvestment Plans

Commerce Bancshares does not have a direct purchase or a dividend reinvestment plan. In order to invest in the company’s stock, you’ll need to purchase it through a broker. Most brokers will allow you to reinvest dividends without any fee. Ask your broker for more information on how to set this up if you are interested.

Helpful Links

Commerce Bancshares’ Investor Relations Website

Current quote and financial summary for Commerce Bancshares (finviz.com)


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