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This is Why Canadian Imperial Bank (CM) is a Great Dividend Stock
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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Canadian Imperial Bank in Focus
Headquartered in Toronto, Canadian Imperial Bank (CM - Free Report) is a Finance stock that has seen a price change of 3.03% so far this year. Currently paying a dividend of $1.12 per share, the company has a dividend yield of 5.22%. In comparison, the Banks - Foreign industry's yield is 2.1%, while the S&P 500's yield is 1.49%.
Taking a look at the company's dividend growth, its current annualized dividend of $4.48 is up 2.9% from last year. Over the last 5 years, Canadian Imperial Bank has increased its dividend 5 times on a year-over-year basis for an average annual increase of 5.14%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Canadian Imperial Bank's current payout ratio is 59%. This means it paid out 59% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CM expects solid earnings growth. The Zacks Consensus Estimate for 2020 is $7.87 per share, representing a year-over-year earnings growth rate of 9.15%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that CM is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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This is Why Canadian Imperial Bank (CM) is a Great Dividend Stock
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Canadian Imperial Bank in Focus
Headquartered in Toronto, Canadian Imperial Bank (CM - Free Report) is a Finance stock that has seen a price change of 3.03% so far this year. Currently paying a dividend of $1.12 per share, the company has a dividend yield of 5.22%. In comparison, the Banks - Foreign industry's yield is 2.1%, while the S&P 500's yield is 1.49%.
Taking a look at the company's dividend growth, its current annualized dividend of $4.48 is up 2.9% from last year. Over the last 5 years, Canadian Imperial Bank has increased its dividend 5 times on a year-over-year basis for an average annual increase of 5.14%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Canadian Imperial Bank's current payout ratio is 59%. This means it paid out 59% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CM expects solid earnings growth. The Zacks Consensus Estimate for 2020 is $7.87 per share, representing a year-over-year earnings growth rate of 9.15%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that CM is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).