Value investors shouldn’t be afraid to pay a fair multiple or even a slight premium for the proven cash cows that have proven themselves over time. Indeed, the markets have corrected and encountered bears on multiple occasions in the past five years. Yet, the cash cows that have continued to pay (and even grow) dividends are the ones that smart investors should continue to commit to for the long haul.
Sure, there are more exciting things in the broad market these days, especially with the AI surge. However, instead of chasing capital gains, I think prudent investors should look to the names that have continued posting steady results which may not have been met with proportional enthusiasm from investors.
It’s these names that I think could be key to faring well in all sorts of market conditions. Bullish ones, like what we’ve experienced since the post-Liberation Day shock back in April, as well as the bearish ones, like the 2022 bear market that led to a year of lost results.
In any case, here are two cash cows that can shine for investors seeking to shift gears from growth to value in time for Q4 2025.
CIBC
The Canadian bank stocks have been hot again, and shares of CIBC (TSX:CM) have been no exception. With the leadership undergoing changes at a time when CM shares are roaring to all-time highs, questions linger as to which execs can help lead the top performer to greater heights.
With Harry Culham poised to take the helm, investors should be inclined to stay the course. Apart from being a proven leader, Culham is getting the baton passed to him at a very good time in CIBC’s history. At just north of $100 per share, with a 3.8% dividend yield, investors are starting to respect the $95.3 billion bank for what it’s worth.
After posting steady quarter after steady quarter, I do think CIBC stands out as a premier name in the Canadian banking scene, especially for those who think there’s nothing to fear with the domestic housing market. At 12.8 times trailing price-to-earnings (P/E), the stock isn’t absurdly undervalued, but they are reasonably priced (though, a slight premium versus historical averages is attached), given the recent momentum behind the business.
IA Financial
IA Financial (TSX:IAG) is another Canadian financial that’s at fresh highs, but still looks cheap at 13.7 times trailing P/E. With a 2.7% yield, IAG is also a great dividend and dividend growth play for investors looking for a steady cash cow that can deliver for most seasons.
While insurance and wealth management can be an economically sensitive business, I’d be willing to stick with IA, given that its managers have done a better job than most at navigating tricky challenges and macro headwinds. With a $13.7 billion market cap, IAG is still a relative lightweight on the scene. And given its trajectory, I’d say it has more room to run as the exceptional managers running the show make the most of industry tailwinds.
The latest 10% dividend hike, I believe, is a massive vote of confidence in the firm’s medium-term future. Investors shouldn’t ignore it.
