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Does Canadian Imperial Bank of Commerce (TSE:CM) Have A Place In Your Portfolio?

There is a lot to be liked about Canadian Imperial Bank of Commerce (TSE:CM) as an income stock. It has paid dividends over the past 10 years. The company currently pays out a dividend yield of 4.4% to shareholders, making it a relatively attractive dividend stock. Should it have a place in your portfolio? Let’s take a look at Canadian Imperial Bank of Commerce in more detail.

See our latest analysis for Canadian Imperial Bank of Commerce

Here’s how I find good dividend stocks

If you are a dividend investor, you should always assess these five key metrics:

  • Is it the top 25% annual dividend yield payer?

  • Does it consistently pay out dividends without missing a payment of significantly cutting payout?

  • Has it increased its dividend per share amount over the past?

  • Can it afford to pay the current rate of dividends from its earnings?

  • Will the company be able to keep paying dividend based on the future earnings growth?

TSX:CM Historical Dividend Yield September 21st 18
TSX:CM Historical Dividend Yield September 21st 18

Does Canadian Imperial Bank of Commerce pass our checks?

Canadian Imperial Bank of Commerce has a trailing twelve-month payout ratio of 45.8%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect CM’s payout to remain around the same level at 44.7% of its earnings, which leads to a dividend yield of around 4.4%. Moreover, EPS should increase to CA$12.2.

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When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.

Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. In the case of CM it has increased its DPS from CA$3.48 to CA$5.44 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.

Compared to its peers, Canadian Imperial Bank of Commerce produces a yield of 4.4%, which is high for Banks stocks but still below the market’s top dividend payers.

Next Steps:

With this in mind, I definitely rank Canadian Imperial Bank of Commerce as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three essential aspects you should further research:

  1. Future Outlook: What are well-informed industry analysts predicting for CM’s future growth? Take a look at our free research report of analyst consensus for CM’s outlook.

  2. Valuation: What is CM worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether CM is currently mispriced by the market.

  3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.