Motley Fool investors seeking out investments shouldn’t be considering stocks they aren’t going to hold long term. However, would you also want to invest in that stock again and again? If not, you might want to take another look and consider a different option.
That’s why today, I’m going to cover the dividend stock I would buy again and again until I’m blue in the face — even when it’s down 23% and, in fact, especially when it’s down. Here’s exactly why.
Canadian Imperial Bank of Commerce
The Big Six banks in general are strong choices for Motley Fool investors to consider right now. Granted, many of these banks have exposure to the United States. Right now, that’s a problem, as there is quite a lot of competition for American banks. That competition means they have less cash to put aside for loan losses.
Meanwhile, Canadian banks have provisions and far more of a monopoly on the banking system in the country. Yet of the batch, right now, I like Canadian Imperial Bank of Commerce (TSX:CM) the most — especially as the dividend stock offers a killer deal.
Shares of CIBC stock are down 23% in the last year, and trade at 11.19 times earnings as of writing. But zoom out and you’ll see shares are still up 38% in the last decade. Zoom out even further, and you’ll see during the last recession, the Great Recession, shares recovered to pre-drop prices within a year of hitting 52-week lows.
Why so confident?
The main fear about banks right now is the exposure to the United States. For CIBC stock, there just isn’t that huge fear. During 2022, the net income breakdown included 36% coming from personal and business banking in Canada, 31% from capital markets, 30% from commercial and wealth management, with just 12% from the U.S.
And while other banks also have exposure to the U.S., they tend to have far more. Because of this, they need even more provisions set aside, and this can lead to fewer dividend increases. Not CIBC stock, which tends to increase its dividend quite regularly, at least once a year. Currently, the dividend stock also offers the best deal for your dime.
Shares of CIBC stock are the cheapest by share price of the Big Six banks after its stock split last year. The dividend stock now offers a 6.01% dividend yield as well, coming to $3.40 per share annually. In fact, here is what you could get with a $5,000 investment today.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND (ANNUAL) | TOTAL PAYOUT (ANNUAL) | FREQUENCY |
| CM | $55.19 | 91 | $3.40 | $309.40 | Quarterly |
Bottom line
Granted, $309.40 isn’t the most amount of passive income you can lock up on the market right now. However, long-term investors will continue to see this dividend stock climb, recover, and grow for years to come. That stability is why I’ve invested in CIBC stock, and that with its dividend is while I’ll continue to do so for years to come. So, while that passive income may not be much now, in a few years, it certainly will be.
