If you have $8,000 to invest, creating passive income through dividend stocks can be an ideal strategy. But where to begin? The Canadian Big Six banks are some of the best places to look, as these provide consistency in growth and dividends. Canadian Imperial Bank of Commerce (TSX:CM) is a fantastic option. Let’s dive into why passive income is a smart choice, especially with CM’s recent financial performance and solid future outlook.
CIBC’s passive-income strategy
To start, passive income lets you earn money without actively working for it. With an $8,000 investment, you can put your money to work for you. Imagine receiving regular dividends just by holding CIBC shares. It’s a win-win! Dividend stocks like CM can bring you a steady income flow, and it’s even more appealing because of its long-standing reliability as one of Canada’s leading banks. This can make passive income investing a good fit, even if you’re not looking to be glued to market charts all day.
Now, why CIBC stock specifically? Let’s talk about its impressive recent earnings. In its most recent quarter ending July 2024, CIBC reported a quarterly revenue growth of 19.6% year over year, thus reflecting strong performance across its banking segments. The dividend stock posted a net income of $6.46 billion over the past 12 months, which is a testament to its financial strength. The robust revenue and profit growth show CM is in good shape, thus making it an attractive choice for dividend-seeking investors — one that’s continued for decades.
Looking back
Historically, CIBC has a solid track record. The dividend stock has shown resilience through market ups and downs, with consistent dividends over the years. With a trailing price-to-earnings (P/E) ratio of 12.98 and forward P/E of 11.79, CM is reasonably valued, thus indicating it’s still a good deal in today’s market. This stability can be comforting if you’re looking for passive income, as CM’s steady performance could mean fewer surprises along the way.
Speaking of dividends, CM currently offers a forward annual dividend yield of around 4.01%, translating to an annual payout of $3.60 per share. With a payout ratio of 51.66%, CIBC shows it can comfortably cover its dividends with its earnings. So, for an $8,000 investment, you’re looking at a regular, attractive return. Plus, dividends are a form of passive income that can cushion your investment portfolio.
Future favourite
Looking forward, CIBC’s upcoming earnings release on December 5, 2024, will give further insights into its financial outlook. This transparency is beneficial for dividend investors because it allows them to gauge if CM is on track to maintain or even grow its dividend. The bank’s diverse offerings across personal banking, wealth management, and capital markets are expected to keep boosting its profitability, thus making it a likely candidate for continued dividend payouts.
CIBC’s financials paint a reassuring picture. Its total assets stand at a whopping $263.19 billion, supported by a solid balance sheet. The bank’s focus on capital efficiency is evident in its return on equity (ROE) of 12.37%. This shows that management is effectively using shareholders’ funds to generate profits. These metrics can assure passive income investors that CM is a well-managed, income-generating machine.
Bottom line
So, how much could you bring in from that $8,000 investment? Let’s look at this below, considering the dividend that you can bring in right now.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | INVESTMENT |
| CM | $89.50 | 89 | $3.60 | $320.40 | quarterly | $8,000 |
If you’re building a dividend-focused portfolio, a blue-chip stock like CM can provide a strong foundation. CM can bring in $320.40 in passive income from dividends alone from an $8,000 investment. Its stability, solid earnings, and reliable dividend history make it an attractive pick. With an $8,000 investment in CM, you’ll likely enjoy a steady income and be part of a well-established Canadian institution.
