Why I Keep Buying Shares of This 5.44%-Yielding Dividend Stock

This dividend stock continues to be one of the top companies that Canadians, including me, love to pick up for over 150 years!

| More on:
data analytics, chart and graph icons with female hands typing on laptop in background

Image source: Getty Images

If you’ve been investing for a while, it’s likely that you already have Canadian stocks that are just simply your go-to. Companies you’ll buy over and over again no matter what’s going on, knowing full well that shares will climb once again if they dip.

That’s why today, we’re going to look at one of my favourite Canadian dividend stocks — a company that I, as well as many other Canadians, love. Here’s why I will pretty much always buy shares of this dividend stock.

CIBC stock

If there is one stock that I continue to come back to, it’s Canadian Imperial Bank of Commerce (TSX:CM). With a dividend yield of 5.44%, it’s easy to see why. But the company has offered so much over the years. 

Founded way back in 1867, CIBC has a long history of standing strong through thick and thin. It’s one of Canada’s “Big Five” banks, so it has that rock-solid reputation. Yet since then, another reason CIBC has been a hit among Canadians is its solid performance. CIBC stock’s consistent financial results and strong balance sheet make it a star player in any investment portfolio. Investors feel confident that their money is in safe hands, knowing the bank is well-managed and focused on growth.

Let’s not forget about innovation. CIBC isn’t just sitting back and enjoying past successes. They’re like that tech-savvy friend who’s always got the latest gadgets. The bank has been making strides in digital banking, offering cutting-edge services that cater to the modern, tech-savvy customer. Whether it’s through its mobile app or online banking features, CIBC is staying ahead of the curve.

About that dividend 

CIBC’s history of paying dividends stretches back over a century. Yep, you heard that right! The company has been sharing the wealth with their shareholders since 1868, just a year after they were founded. It’s like they’ve been handing out cookies with every loaf of bread for over 150 years. 

Now, let’s talk about today’s numbers. CIBC’s dividend yield typically hovers around the 4-5% mark, which is pretty impressive. For instance, as of the latest data, the dividend yield stands at a tasty 5.44%. That’s like getting an extra $5.44 for every $100 you’ve invested just for hanging onto your shares. And get this: CIBC has increased its dividend payouts regularly. Over the past decade, CIBC has boosted its dividend by an average of 7% per year. 

The bank’s payout ratio — that’s the percentage of earnings paid out as dividends — is also something to smile about. CIBC keeps it at a sustainable level, usually around 40-50%. This balance ensures the company is rewarding shareholders while still having enough dough left over to reinvest in their business. It’s like the bakery expanding its offerings while still giving you that free cookie.

Looking ahead

As of writing, many analysts continue to either have a “buy” or “hold” rating on CIBC stock, with the consensus price target pointing to more growth. It’s not a get-rich-quick scheme but more like a steady, reliable method of growth.

The positivity comes from CIBC’s solid financial health. CIBC has a strong balance sheet with good liquidity and capital ratios, which means it’s well-prepared to handle economic ups and downs. This stability makes analysts confident in the bank’s ability to maintain and grow its dividends — something that investors love to hear. 

But, of course, not everything is perfect. There are always some cautious notes. Some analysts point out potential risks, like exposure to the Canadian housing market and economic uncertainties. It’s like that friend who loves the new coffee blend but warns you it might be a bit too strong for some tastes. These risks are important to consider, but they don’t overshadow the overall positive sentiment.

Yet, overall, CIBC stock remains a top choice for investors like me and many other Canadians — especially with that solid dividend yield of 5.44%, which looks like it will remain forever.

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.

More on Dividend Stocks

Golden crown on a red velvet background
Dividend Stocks

Dividend Powerhouses: Canadian Stocks to Fuel Your Portfolio

These two top Canadian dividend aristocrats are some of the top stocks on the TSX to buy now and hold…

Read more »

Dial moving from 4G to 5G
Dividend Stocks

This Undervalued Dividend Stock is Worth Buying Right Now

Want an undervalued dividend stock with long-term potential and a juicy yield? Here's an option you may regret not buying…

Read more »

A worker gives a business presentation.
Dividend Stocks

1 Stock I’m Buying Hand Over Fist in July Despite the Market’s Pessimism

This top dividend stock is going through a rough patch, but don't let that count out all the growth we've…

Read more »

person on phone leaning against outside wall with scenic view at airbnb rental property
Dividend Stocks

2 TSX Stocks Poised to Have a Big Summer

Restaurant Brands International (TSX:QSR) stock and another darling that could be too cheap to ignore this summer.

Read more »

Dividend Stocks

Forget Fortis Stock: Buy This Magnificent Utilities Stock Instead

Looking for high dividends and returns? Then I'm sorry, but Fortis (TSX:FTS) stock probably isn't for you.

Read more »

Increasing yield
Dividend Stocks

2 High-Yield (But Slightly Risky) Stocks to Keep Your Eye on

Have these top TSX dividend stocks finally bottomed?

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks I’d Buy if They Fall a Bit

Any near-term decline in these two top Canadian dividend stocks will make them look even more attractive.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Got $3,000? 3 Dividend Stocks to Buy and Hold for the Long Term

You can buy these three Canadian dividend stocks with an investment as low as $3,000 right now and expect to…

Read more »