1 Magnificent TSX Dividend Stock Down 22% to Buy and Hold Forever

This dividend stock may be down 22% from all-time highs, but is up 17% in the last year alone. And more growth is certainly on the way.

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Canadians looking for a magnificent TSX dividend stock have a few options to consider. Yet if you want stability, the Big Six Banks continue to be some of the best options out there. And among them, one strong dividend stock to consider is Canadian Imperial Bank of Commerce (TSX:CM).

So today, let’s go into why this dividend stock, currently down 22% from all-time highs, is a great stock to pick up on the TSX today.

About CIBC stock

CIBC stock is one of Canada’s largest banks, providing a range of financial products to over 11 million clients around the world. The dividend stock offers a wide array of services, including retail and business banking, wealth management, investment banking, and capital markets services. It operates primarily in Canada and the United States but also has a presence in other countries.

Yet what investors have historically loved about CIBC stock is its dividend. Many investors are attracted to bank stocks like CIBC for their dividend income, as these companies often have a long track record of paying dividends and are seen as relatively stable investments.

However, it’s been difficult during an economic downturn for CIBC stock. The global economic climate, particularly high inflation and rising interest rates, has impacted CIBC’s ability to achieve some performance goals. The bank increased its provisions for potential loan defaults in the last year, particularly in the United States commercial real estate and personal and business banking sectors in Canada. This suggests a more cautious outlook on loan repayments.

Overall positive performance

This being said, overall CIBC stock performance has been quite positive. Especially compared to the history of CIBC stock, which tends to perform poorly from its exposure to the Canadian housing market. This has left it open to mortgage payment defaults on loans.

However, CIBC stock has instead performed well. The company has seen consistent revenue growth over the past several years. Profitability has increased, and it’s been successful at attracting new clients. Over half a million net new clients were added in the last year alone.

What’s more, we can look at recent earnings reports to see that the stock is seeing some positive momentum. In the third quarter of 2023, the company reported revenue of $5.85 billion, with adjusted diluted earnings per share (EPS) of $1.52. By the fourth quarter this came down slightly to $5.84 billion, with adjusted diluted EPS higher at $1.57. When the first quarter hit in February, there was an improvement and surge to $6.22 billion, and adjusted diluted EPS at $1.81!

Bottom line

There has been some major momentum underway for CIBC stock. In fact, while shares are down 22% from all-time highs, it’s actually up 17% in the last year alone! What’s more, it continues to trade at about 10 times earnings as of writing. All while offering a 5.49% dividend yield as well. This is a fair bit higher than its five-year average of 5.27% for the dividend stock, and still with a stable 53% payout ratio.

So if you’re looking for a strong stock to buy and hold, consider CIBC stock. You’ll get the dividend, growth, and overall income you desperately want from this magnificent TSX stock.

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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