Invest in This Workhorse Canadian Company for Strong TFSA Returns

CIBC (TSX:CM) is just one of many intriguing dividend stocks fit for Canadians’ long-term TFSA portfolios.

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TFSA (Tax-Free Savings Account) investors need to have a long-term focus if they seek to achieve a fat retirement nest egg. Indeed, you can beat markets on a near-term basis. However, it’s really hard to crush broader markets by constantly trading stocks. Instead, TFSA investors may wish to position their portfolios in a way such that they don’t need to make so many moves in any given week or month.

Undoubtedly, when markets begin to slip into a correction, you can always top up positions at the core of your TFSA. But for the most part, you don’t need to make moves to those inevitable bumps in the road. I like to view long-term investing as more like a boxing match.

TFSA investing 101: Rolling with the punches in a rocky market

You should be able to roll with the punches as well as dodge and weave past punches that you know will be thrown your way. With cheap value stocks that can handle the market-wide choppiness, your portfolio will be able to keep its chin down and hands up. That way, it’ll be able to fare well, even when market storm clouds move in.

In this piece, we’ll consider a Canadian workhorse that can help power robust results for your TFSA over the next five years and beyond. Indeed, five years is quite a long-term horizon. Though the following names could fare well over a near-term timespan, I think that five years may be needed for optimal results. Remember, the longer your investment horizon, the better your risk/reward tradeoff stands to be.

Without further ado, consider CIBC (TSX:CM).


CIBC is a Big Five Canadian bank that’s sitting down around 32% from its all-time high hit back in early 2022. Undoubtedly, a recession could be coming to Canada. As employment looks to take a hit while interest rates continue to climb higher, the chin of the Canadian housing market stands to be tested.

Of course, we’ve heard chatter about some sort of Canadian housing bubble for quite some time now. Though higher rates will make it more challenging for those with mortgages, I don’t think a wave of defaults is coming anytime soon — at least not to the magnitude of a 2008 Great Financial Crisis.

In that regard, I view CIBC, a domestic mortgage-heavy bank, as more of a value opportunity than an at-risk bank. The stock is looking quite cheap at just north of 11 times trailing price to earnings (P/E). The 6% dividend yield also looks bountiful and well covered.

Undoubtedly, loan losses and all the headwinds that accompany recessions could weigh heavily on future quarters. Still, I think there’s already been so much negativity built into shares over the past year. If things aren’t as bad as they seem, CIBC stock could be an intriguing value play for any long-term-focused TFSA fund.

The Foolish bottom line

The Canadian banks have really been under pressure over the past year. The regional banking crisis in the U.S. really derailed any rebound hopes of the banks back in March. Though there are notable risks with the banks, I think the potential rewards make such risks worth taking on at this juncture.

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.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Fool contributor Joey Frenette has no position in any stocks mentioned.

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