Why ARC Resources Ltd and Canadian Imperial Bank of Commerce Deserve a Closer Look

Canadian Imperial Bank of Commerce (TSX:CM) (NYSE:CM) and ARC Resources Ltd. (TSX:ARX) offer solid opportunities for income investors.

| More on:
The Motley Fool

Oil and gas and banking stocks offer solid opportunities for income growth. ARC Resources Ltd (TSX: ARX) and Canadian Imperial Bank of Commerce (TSX: CM)(NYSE: CM) both have proven track records in their respective industries and would be welcome additions to any portfolio.

The two companies also provide income for investors and contribute to portfolio strength via diversification.

1. ARC Resources Ltd

ARC Resources achieved record Q2 production of 110,165 boe per day. This represents an increase of 18% over Q2 2013 and an increase of 4% over Q1 2014. Since the company formed, ARC has expanded production 10-fold. ARC is maintaining full-year production guidance of 110,000 to 114,000 boe per day for 2014.

The primary growth drivers for ARC are its Montney assets in northern Alberta and northeast British Columbia. The Montney provides ARC with exposure to natural gas, natural gas liquids and oil production. To promote growth in this region, the company’s capital program in the Montney was approximately $590 million in 2013.

President/CEO of ARC Resources Myron Stadnyk stated recently, “Our 2014 capital budget has been increased to $975 million, a portion of which will enable us to accelerate certain strategic initiatives in the Montney region of British Columbia.”

Since its inception in 1996, ARC has paid more than five billion in total dividends. Additionally, it has provided more than an 18% annual return to shareholders.

Last year, ARC paid over $374 million in dividends to its shareholders. ARC’s current dividend yield is 3.83% and its dividend rate is $1.20. The company has paid an annual dividend of $1.20 per share or higher for more than 17 years.

2. Canadian Imperial Bank of Commerce

CIBC serves 11 million customers globally through its Retail and Business Banking, Wealth Management and Wholesale Banking business units. CIBC has more than 1,100 branches in Canada.

In Q3 2014, the bank saw strong performance from its Wealth Management unit. This unit includes its asset management, retail brokerage and private wealth management businesses. Wealth Management had net income of $121 million for Q3. This represents an increase of $19 million or 19% from Q3 2013.

Its assets under management were increased by mutual fund sales and growth in Canadian and U.S. stock markets. In Q3, CIBC Asset Management had its 22nd consecutive quarter of positive net sales of long-term mutual funds.

CIBC acquired Atlantic Trust Private Wealth Management this year, which contributed to increased revenues in its Wealth Management unit. The bank believes this acquisition will help grow its wealth management business throughout North America. Atlantic Trust was recently ranked the second-highest luxury brand among wealth management firms in the United States.

CIBC has a current dividend yield of 3.82% and its dividend rate is $4.00. The bank’s five-year total shareholder return at year-end 2013 was 109.3%. Its objective is to deliver an adjusted dividend payout ratio between 40% and 50% of its earnings and a rolling five-year total shareholder return above the industry average.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Michael Ugulini has no position in any stocks mentioned.

More on Dividend Stocks

A close up image of Canadian $20 Dollar bills
Dividend Stocks

This High-Yield Dividend Stock Is a Monster Passive-Income Machine 

This top TSX dividend-growth stock offers a 7.4% yield.

Read more »

Hourglass projecting a dollar sign as shadow
Dividend Stocks

For a Shot at $5,000/Year in Passive Income, Buy 6,850 Shares of This TSX Stock

Whitecap Resources is a monthly dividend stock that offers you a tasty dividend yield while trading at a cheap valuation.

Read more »

edit Balloon shaped as a heart
Dividend Stocks

Love Value Stocks? 2 That Are Screaming Buys in May 2024

Patience can pay off by investing in these two value stocks with nice dividends and the potential to turn around.

Read more »

Senior Couple Walking With Pet Bulldog In Countryside
Dividend Stocks

2 Everlasting Canadian Stocks for Your RRSP

The Canadian National Railway (TSX:CNR) stock is worth owning for the long haul.

Read more »

Business success with growing, rising charts and businessman in background
Dividend Stocks

3 Stocks Set for Dividend Increases This Year

Here are three TSX stocks that are set to increase their dividends later this year.

Read more »

Dice engraved with the words buy and sell
Dividend Stocks

EQB Inc Stock: Buy, Sell, or Hold

EQB Inc (TSX:EQB) is Canada's fastest-growing bank.

Read more »

pipe metal texture inside
Dividend Stocks

Enbridge Stock: Buy, Sell, or Hold Today?

Enbridge is up 7% in the past six months. Are more gains on the way?

Read more »

money cash dividends
Dividend Stocks

The 2 Stocks Every Dividend Investor Should Own for Reliable Cash

Dividend stocks offering consistent and reliable returns can be a crucial asset in any portfolio, especially for income-producing dividend portfolios.

Read more »