Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Canadian Imperial Bank (CM) is headquartered in Toronto, and is in the Finance sector. The stock has seen a price change of 8.19% since the start of the year. The bank and financial services company is currently shelling out a dividend of $0.77 per share, with a dividend yield of 3.13%. This compares to the Banks - Foreign industry's yield of 2.36% and the S&P 500's yield of 1.36%.
Looking at dividend growth, the company's current annualized dividend of $3.06 is up 10.5% from last year. Over the last 5 years, Canadian Imperial Bank has increased its dividend 4 times on a year-over-year basis for an average annual increase of 4.50%. Looking ahead, future dividend growth will be dependent on earnings growth and 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 46%, meaning it paid out 46% of its trailing 12-month EPS as dividend.
CM is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2026 is $6.88 per share, with earnings expected to increase 11.87% from the year ago period.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, CM presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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Canadian Imperial Bank of Commerce (CM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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