The Canadian bank stocks are slowly starting to wake up again, with some of the better performers now making new all-time highs. Undoubtedly, the post-pandemic environment hasn’t been all too kind for the big banks, but as interest rates begin to inch lower, I think a number of well-run banks will return to the loan growth track as their credit headwinds continue to fade.
Indeed, not all Canadian banks have participated in the recent second-half upswing. Either way, the banks finally look to be worth banking on as a source of long-term capital gains and growing passive income.
As we head into 2025, there’s a lot in the way of economic and industry uncertainty. The sagging loonie and the threat of 25% tariffs may just put a bit of a dampener on the broad rally in the TSX Index. Regardless, I think the longer-term trajectory for the bank stocks looks incredibly good. And with that, it may be time to check in with the banks as they attempt to make up for lost time by continuing the recent momentum that began earlier in the summer.
CIBC stock has surged over 95% since last year’s lows. There may be more room to run!
CIBC (TSX:CM) was one of the notable outperformers this year, with shares close to new all-time highs just shy of $95 per share. The $89.7 billion bank has seen its shares rocket more than 47% year to date and just north of 95% since its lows in late October of 2023.
Indeed, it’s quite uncommon to see a bank stock, especially a relative underdog (at least in terms of market cap), nearly double in around 14 months. Of course, another doubling in the next two years is highly unlikely, at least in my opinion, given the degree of multiple expansion and renewed optimism for the path ahead. But does that mean the stock can’t continue to score satisfactory or even market-beating results moving forward?
Definitely not. CIBC is firing on all cylinders again, and while the low-hanging fruit has been grabbed by the bravest of contrarian investors as CM stock eventually hit bottom more than a year ago, I still see significant value to be had in the name as it aims to break past the $100 level.
At the time of writing, shares of CM go for 12.94 times trailing price to earnings (P/E) — pretty cheap. The 4.02% dividend yield isn’t as swollen as it used to be. Arguably, the previously swelled yield is back to normalized conditions. Still, it’s nice to have a growing dividend alongside newfound momentum for those seeking total returns (gains plus dividends).
CIBC is no longer the “cheap one” of the Big Six Canadian banks, but still a solid value option for income investors!
Sure, CIBC is no longer the value play of the Big Six. It’s now more of a fairly valued top performer. Still, if you’re looking to ride on the back of a well-run dividend grower into the new year, I’d look no further than the name, especially as rates retreat and the domestic mortgage business becomes less of a worry for investors.
