If you’re looking for a reliable way to grow your Tax-Free Savings Account (TFSA), there’s no shortage of flashy, high-risk investments vying for your attention. But sometimes, slow and steady really does win the race, especially when it comes with a juicy monthly payout. Enter Canadian Imperial Bank of Commerce (TSX:CM), or simply CIBC. This blue-chip stock may not have the sizzle of a startup, but with a solid 3.9% forward dividend yield and strong performance in its latest earnings, it could be just the cash-generating machine your TFSA needs.
A stable dividend
CIBC stock pays out a strong dividend, working out to roughly $0.97 per share every three months, or about $3.88 annually. Spread across the year, it’s the equivalent of a steady monthly income stream, especially if you set up a dividend reinvestment plan or automate your withdrawals. And with the dividend stock trading at $99.70 as of this writing, that 3.9% yield is far from stingy. In fact, a $10,000 investment could bring in $388 per year in income!
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| CM.TO | $99.71 | 100 | $3.88 | $388.00 | Quarterly | $9,971.00 |
The real appeal of CIBC lies in its strength and predictability. In its second-quarter 2025 results, CIBC reported $7 billion in revenue, up 14% from the year before. Adjusted net income came in at $2 billion, also rising 17% year over year. While revenue dipped slightly compared to Q1, the dividend stock still posted a very healthy adjusted diluted earnings per share (EPS) of $2.05. That kind of consistency is gold for income investors.
Safety in numbers
A closer look under the hood shows even more reasons to be confident. CIBC’s Canadian Personal and Business Banking segment brought in $734 million in net income, up 4% year over year, driven by volume growth and higher net interest margins. Its Capital Markets arm posted $566 million in earnings, a 20% jump, thanks to robust financing and trading activity. Meanwhile, the U.S. Commercial Banking and Wealth Management division nearly doubled its earnings from a year ago.
Of course, no investment is without risk. CIBC’s provision for credit losses rose to $605 million in Q2, reflecting a more cautious stance amid ongoing economic uncertainty. That’s not exactly great news, but it also shows the bank isn’t sugar-coating the environment. In fact, CIBC has proven that it’s positioning itself for long-term resilience. Its CET1 ratio, a key measure of capital strength, stood at 13.4%, still above regulatory requirements.
More to come
Another reason income-focused investors are paying attention? CIBC’s payout ratio currently sits around 47%. That means the bank is paying less than half of its earnings in dividends, a good sign that the current payout is sustainable, even if earnings fluctuate. In other words, you’re not getting income at the expense of future growth.
There’s also a long-term upside worth considering. CIBC has grown its dividend over time and maintains a strong track record of rewarding shareholders, even during rough patches. The dividend stock itself has climbed nearly 44% over the past 12 months, significantly outpacing the broader S&P/TSX Composite Index. That kind of appreciation, paired with a nearly 4% yield, creates a powerful combination for TFSA investors seeking total returns.
Bottom line
So how might this actually turn your TFSA into a “cash machine”? Over a decade, with some dividend growth and price appreciation, your annual income could easily surpass $2,500 or more, depending on reinvestment and compounding.
Could that money alone fund your retirement? Probably not. But when added to a diversified portfolio of dividend payers and growth stocks, it creates a dependable base of cash flow, without the headache of worrying whether your next investment will flop.
