1 Dividend Stock Down 18% to Buy Right Now

CIBC (TSX:CM) is a strong dividend stock investors should certainly consider not just for passive income, but future growth as well.

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There are still quite a few dividend stocks that Canadians are sleeping on. In fact, they’re mainly sleeping on them because they seem to have already grown. For instance, the Canadian banks are a sector that pretty much across the board has seen growth beyond 52-week highs or back near them in the last year. But look back further, and there are opportunities.

In fact, the banks in general are dividend stocks that still have a ways to go to reach not 52-week highs, but the highs achieved before the downturn back in 2021. That leaves a pretty hefty increase for many, but perhaps none so much as Canadian Imperial Bank of Commerce (TSX:CM).


CIBC stock has been one of the hardest hit in terms of Canadian banks, with the company having a lot of exposure to the housing sector. I’m sure you’re already aware how that’s turned out over the last few years. The bank continues to be prepared for future loan defaults, and investors have shown concern instead of getting back in.

However, during the bank’s most recent earnings report, the company soared past earnings estimates. Leading the stock on towards 52-week highs, CIBC reported overall positive results, with net income growth in both Canadian personal and business banking as well as Canadian commercial banking and wealth management. 

Earnings per share reached $1.77, significantly higher than the same time the year before. Net income was also up, with revenue increasing 5.4% year over year during the first quarter. Provisions for credit losses were higher than analysts expected, however, this is to be expected. Especially with expectations the company could see loan defaults, as mentioned.

More growth to come?

While this was a significant improvement for CIBC, investors will likely want to learn whether there is more growth to come. And here there definitely seems to be some positive aspects. In particular, there was strong domestic retail performance, with growth in its net interest margin as well as client volume.

The continued rate hikes or at least higher levels would also benefit CIBC stock, as well as other banks. This increases their net interest margins even further. There is also economic optimism that we’ll continue achieving a soft landing, which could bring in more business growth, leading to more loan demand.

Is it all good news?

Of course these are what ifs on the positive side. On the negative side, we could continue to see credit loss provisions rise and defaults on loans as well. Global slowdowns or a recession could also impact loan demand and overall economic activity. This could hinder growth for CIBC stock as well.

Even so, when it comes to CIBC stock, it’s proven to be a strong investment for long-term earners. Therefore, it looks as if the company will all but certainly achieve its all-time highs once more. And when it does, this 18% discount will likely look like a strong buy.

Meanwhile, you’ll grab onto a solid dividend yield currently at 5.36% as of writing. So it’s not like you won’t be paid to wait! And, in fact, you’ll like be paid in passive income through returns as well.

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 Amy Legate-Wolfe has positions in Canadian Imperial Bank Of Commerce. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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