There are few times that stand out as times when you could pick up stocks and get seriously rich. But today, I’m going to show you just how to do that. No, not with some growth stock that could drop in the near future. But with proven results from a conservative stock.
Today, the stock I’m going to focus on is Canadian Imperial Bank of Commerce (TSX:CM).
Why CIBC stock
That’s a fair question, considering that CIBC stock is down perhaps the most of the Canadian banks right now. Yet this is also precisely why I would pick it up. Here at Motley Fool, we don’t think about month-to-month performance. No, we think years, even decades ahead.
CIBC stock, therefore, is an excellent choice. The bank has provisions for loan losses that will see it out of this recession. You can look back on decades of recessions to show that this has been the case. In fact, CIBC stock usually comes out of recessions back to pre-fall highs within a year of hitting recession lows. That included the Great Recession as well.
While it’s true that it may struggle in the next few months, and even the next year, that still makes now a great time to buy. You can pick up CIBC stock for a steal and look forward to sustained growth as well as quick growth in the next year or so.
Look to the past for future performance
While we can’t guarantee anything, CIBC stock should still be around and perform similarly over the next few decades. So, we’re going to look at past performance and see what that might look like in the future.
Below, you’ll find a chart detailing the growth we’ve seen with CIBC stock over the last three decades. This won’t include reinvesting dividends but will show what $10,000 invested in 1993 could be worth today. Note, I’ve adjusted for the four stock splits as well.
|COMPANY||RECENT PRICE||NUMBER OF SHARES||DIVIDEND (ANNUAL)||TOTAL PAYOUT (ANNUAL)||FREQUENCY||TOTAL PORTFOLIO|
|CM – 1993||$7||1,428||$1.32||$1,884.96||Quarterly||$10,000|
|CM – 2023||$58||357||$3.40||$1,213.8||Quarterly||$20,706|
As you can see, your shares will more than double in that time, and reinvesting dividends would bring that even higher.
What could that look like?
Let’s look to the future. Let’s say you purchased CIBC stock today, down about 21% in the last year. You then see shares return to previous 52-week highs. From there, we see a compound annual growth rate (CAGR) of 7.3%, as with the last 30 years. Plus, the dividend has a CAGR of 3.2% in that time.
Here is what that could look like for shareholders in another three decades with that $10,000 investment.
|Shares Owned||Annual Dividend Per Share||Annual Dividend||After DRIP Value||Year End Shares Owned||Year End Stock Price||New Balance|
By another 30 years, reinvesting that income could bring you a portfolio worth $221,711 with dividends included!