Comerica Cuts Dividend Again

Comerica (CMA Quote) on Wednesday slashed its dividend to 5 cents from 33 cents per common share, in a move expected to preserve $170 million in capital.

The dividend is payable on April 1 to shareholders of record as of March 15. The cut followed the company's 50% reduction of its fourth-quarter dividend.

The cut does not come as a surprise. Comerica was sixth on the list of large, profitable holding companies with the highest dividend payouts, with a payout ratio of 153%, according to Highline Financial. TheStreet.com recently noted that many of these banks were ripe for dividend cuts.

Comerica's total payout on common shares for all of 2008 was $2.31, or 179% of its $1.29 in earnings per common shares.

Following a continued decline in Comerica's earnings, CEO Ralph Babb Jr. expressed confidence that Comerica's credit quality in 2009 would be consistent with 2008, but said "prudence dictates we retain capital in this uncertain economic environment."

Sandler O'Neill analyst R. Scott Siefers said Comerica's move to cut the dividend was "appropriate," since the common stock was yielding 7.6% as of Tuesday's market close, and the company has not been expected to achieve sufficient earnings to cover its 33 cents per share dividend until the first quarter of 2010.

Other holding companies recently cutting dividends include Zions Bancorp (ZION Quote), Fifth Third (FITB Quote), SunTrust (STI Quote) and Marshall & Ilsley (MI Quote).

Comerica shares recently were up 11.2% to $19.26.