Buy 78 Shares in This Glorious Dividend Stock And Create $1,754 in Passive Income

This dividend stock surged in its first quarter, and more could be on the way as it works its way back to all-time highs.

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When it comes to dividend stocks, you don’t mess with Canadian investors. They are all about creating passive income, with a major focus on dividends. And that can mean a focus on a high dividend yield. But while that dividend yield might look great, a truly glorious dividend stock will offer you returns as well.

That’s why today, we’re going to look at a strong dividend stock that will offer you both. In fact, it already has this year! So, let’s take a look at it and what investors can achieve in passive income in the very near future.

CIBC

The Big Six banks are great, but not all of them offer the passive income that comes from investing in Canadian Imperial Bank of Commerce (TSX:CM). That’s because CIBC stock fell so dramatically during this downturn.

While others managed to remain fairly stable, there was a lot of fear that CIBC stock wouldn’t perform well during its earnings reports. That’s because the company is quite exposed to the Canadian housing market. And that market can come with defaults on loans when Canadians need to save cash among higher interest rates.

It also means there is less spending on housing, and therefore, fewer mortgages are created. And yet, CIBC stock has done quite well! So, let’s take a look at the kind of momentum the company has seen in the last few quarters.

Momentum unlocked

By looking at the last few quarters, we can paint a better picture of how CIBC stock is performing as a bank. Rather than looking year over year, we want to see that CIBC stock is remaining strong even in these difficult circumstances. What’s more, that there is potentially even some growth.

We’ll start with the third quarter of last summer, which reported $5.85 billion in revenue and $1.43 billion in net income, with adjusted diluted earnings per share (EPS) at $1.52. By the fourth quarter, revenue remained stable at $5.84 billion, with net income rising slightly to $1.483 billion and adjusted diluted EPS at $1.57. The company ended the year strong, thanks to its investments, according to management.

Then came the first quarter, and CIBC stock surged on strong results. Revenue came in at $6.22 billion, net income at $1.728 billion, and adjusted diluted EPS at $1.81. Thanks to the discipline regarding expenses, client retention, and strong credit, the company managed to bounce back to start the year seriously.

More to come

And yet, despite trading near 52-week highs and shares up 15% in the last year, more is likely to come. That would be the case should the stock hit its all-time highs near $83 per share. What’s more, you can also grab a dividend yield of 5.52%. That’s a fair bit higher than its five-year average of 5.27% as of writing.

So, let’s say you were to put $5,000 into CIBC stock and see it rise back to all-time highs. Here is what that would create in passive income.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCYPORTFOLIO TOTAL
CM – now$64.5078$3.60$280.80quarterly$5,000
CM – highs$8378$3.60$280.80quarterly$6,474

When the stock hits those highs, you could earn another $1,474 in returns and $280.80 in dividend income — a total of $1,754.80 in passive income!

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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