Commerce Bancshares Inc. (CBSH)

Commerce Bancshares provides consumer and commercial banking through 191 branch offices in the states of Missouri, Kansas, and central Illinois. The company also underwrites and sells insurance, engages in securities brokerage, manages proprietary mutual funds, and provides trust and estate planning services. CBSH has outperformed the S&P 500 significantly since 1985, yet with much less volatility; the shares have a beta of .60.

CBSH has raised the dividend every year since 1986. The current yield is 1.95% and the payout ratio is less than 30%. Commerce has also issued at least a 5% stock dividend every year since 1993.

CBSH shares made an all-time high of 52.86 last December, but since then they have been drifting sideways to lower as earnings, while good, have not met expectations. CBSH made a 52-week low last month at 47.88 and they have rallied a bit since then. The stock tends to set cyclical lows about three months apart. I am planning to buy some at the cycle low next January, or sooner if it makes fresh 52-week lows before then.

A 9 or 10% discount from the all-time high price may not seem like much of a bargain, but CBSH has a low beta, and this is a company which has amply rewarded patient, long-term investors. They have weathered many an economic downturn with hardly a scratch.

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