There are plenty of attractive dividend stocks, and there are the best dividend stocks to own for the long term. Investors buy a stock for its dividend. But there are instances you can lose money when a sharp fall in the price erases the earnings in dividend payments.
Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is a perennial winner and a no-brainer buy to many investors. Never was there a time when the bank made a dividend cut, even when its share price sunk to its lowest point in late 2016. Likewise, there was no cut or stoppage during the 2008 financial crisis.
CIBC is a must-own stock for beginners, retirees, income seekers, dividend investors, and baby boomers, as well as millennials. There’s no question as to the reliability of this $48 billion banking institution to pamper investors with a steady stream of income.
In recent years, the earnings per share (EPS) of CIBC have been increasing at a moderate pace. There’s nothing spectacular in the bank’s growth, but what is notable is that the bottom line is consistently growing.
EPS in 2014 was $7.86, and as of 2019, the estimate is around $12.10, or 53.9% higher. With this crucial metric, you can pay attention to the bank’s dividends. A strong and steadily growing dividend is one of the features of CIBC. You can build wealth from the stock over the long term.
As mentioned earlier, CIBC did not raise the dividend in the years following the financial crisis but did not see the need to lower it either. This prominent retail bank has a reputation of protecting the dividend.
Even with a prudent dividend history, its dividend streak runs 151 years, including the payouts steady during the financial crisis of 2000 and 2008. Currently, the quarterly dividend is 5.26% better versus the same quarter a year ago. CIBC’s yield today is a juicy 5.37%, which is also the highest in the banking sector.
Many criticize CIBC for its concentration in the Canadian market and its vast exposure to the housing market. Nevertheless, the bank delivers impressive financial results. In the recent third quarter, CIBC reported sequential year-over-year increases in revenues, net income, and EPS.
CIBC is beginning to decrease its exposure to the domestic market gradually. Expansion in the U.S. and other international markets is ongoing. Soon, it expects to generate 25% of revenue from abroad, particularly in the U.S.
Shareholders are rooting for a successful expansion in the U.S. At present, the bank is already seeing strong performances from its capital markets, wealth management, and business banking divisions. The business growth in America will enable CIBC to raise dividends further for sizable gains to investors.
Best long-term investment
CIBC is your best option if you have a long-term financial goal or are merely building wealth. The bank creates shareholder value through its client-focused culture and operational efficiencies. More so, it is more than capable of enduring a recession or a market crash.
What other stock is a no-brainer buy?
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 Christopher Liew has no position in any of the stocks mentioned.