Comerica (CMA): A Dividend Machine Poised to Beat the Odds

The financial sector has been a rollercoaster in 2025, with regional banks like Comerica (NYSE:CMA) facing headwinds from stubbornly high interest rates and lingering recession fears. Yet, this $8.3 billion bank has quietly outperformed expectations in three of its last four quarters—and its stock is trading at a compelling valuation with a 4.66% dividend yield. As it prepares to report Q2 earnings on July 18, here's why investors should lean into Comerica's structural resilience.

The Case for Comerica's Earnings Surprise Potential

Let's start with the numbers. Analysts expect Comerica to report EPS of $1.23 for Q2, down 19.6% year-over-year. But here's the catch: Comerica has beaten EPS estimates in 3 of its last 4 quarters, including a +9.65% surprise in its most recent report. The Zacks Earnings ESP model—which predicts the likelihood of such surprises—gives Comerica a +0.49% positive reading, suggesting another beat is in the cards.

Even more compelling: the Zacks Earnings ESP has a 70% historical success rate when pairing positive readings with a “Hold” (Zacks Rank #3) or higher rating. While Comerica's Zacks Rank #3 might seem neutral, it's important to note that this rating reflects broader sector caution rather than weakness in Comerica's fundamentals.

Dividend Powerhouse in a Low-Yield World

With the Federal Reserve's “higher-for-longer” mantra keeping bond yields elevated, Comerica's 4.66% dividend yield stands out. The bank has paid a dividend for 44 consecutive years and hiked its quarterly payout to $0.71 in August 2025—a 10% increase over the prior year.

The dividend is also well-covered, with a payout ratio of 53.69%—comfortably below the 60% threshold that signals sustainability. Investors chasing yield without excessive risk should take note:

Institutional Buyers Are Already at Work

While analysts are mixed—6 “sell,” 11 “hold,” and 5 “buy” ratings—institutional investors are doubling down. As of Q1 2025, 80.74% of shares are held by institutions, with notable buyers like Voya Investment Management and Strs Ohio adding stakes. Even more telling: Quarry LP's 152% stake increase in late 2024 suggests big money is betting on Comerica's long-term story.

Why the Pessimists Are Overlooking Resilience

Bearish analysts cite sector-wide headwinds like regulatory scrutiny and flat loan growth. But here's where they're wrong:

1. Geographic Focus = Less Risk: Unlike national banks, Comerica's operations are concentrated in Texas, California, and Arizona—states with strong job markets and rising housing demand.
2. Fee Income Growth: Wealth management and commercial lending fees rose 8% in Q1, proving diversification beyond net interest income.
3. Balance Sheet Strength: With a Tier 1 capital ratio of 13.2%, Comerica is well-positioned to absorb shocks.

A Tactical Buy Ahead of Earnings

The consensus price target of $62.35 is a midpoint in a wide range—from Jefferies' $47 “underperform” to Keefe, Bruyette & Woods' $69 “outperform.” Bullish catalysts include:
- A Q2 EPS beat that narrows the 19.6% decline to a smaller miss or even a beat.
- Positive guidance on loan growth and fee income.
- A post-earnings “buy the dip” response if the stock initially sells off on the top-line revenue miss.

Risks to Avoid

• Fed Policy: If the Fed signals another rate hike, regional banks could face renewed pressure.
• Loan Loss Provisions: Elevated credit costs could dent profits.

Final Call: Buy the Dip Around $60

At $63.45, Comerica is within striking distance of its 50-day moving average ($58.26) and its $62.35 consensus target. My advice:
- Wait for the report: If Comerica beats EPS and provides positive forward guidance, add to positions.
- Dollar-cost average: Use dips below $60—a level that's held in recent months—to build exposure.
- Hold for the dividend: This stock offers both income and the potential for capital gains if earnings resilience wins over skeptics.

In a market where fear of the next recession dominates, Comerica's combination of proven earnings beats, above-average yield, and geographic focus makes it a standout play in financials. The July 18 earnings report is the next battleground—but the odds are stacked in the bulls' favor.

Action Items:
1. Monitor the stock's reaction to Q2 earnings.
2. Consider a 5% allocation to CMA if shares dip below $60 post-report.
3. Track the Zacks Earnings ESP for any upgrades ahead of Q3.

The bottom line: Comerica isn't a high-flying growth stock, but it's a tactical buy for investors seeking stability and income in an uncertain economy.