Updated 3/6/25
Canadian Imperial Bank of Commerce (CIBC) is a cornerstone of the Canadian banking industry. As one of the country’s largest banks, it has built a reputation for steady earnings, reliable dividend payments, and a strong presence in both retail and commercial banking. For income-focused investors, CIBC has long been a go-to stock for those looking to generate consistent passive income.
The stock has seen some ups and downs recently, but for long-term dividend investors, short-term price swings often present opportunities rather than concerns. What really matters is whether the company can continue delivering strong dividends while maintaining financial stability. Let’s take a closer look at what makes CIBC an interesting pick for dividend seekers.
Key Dividend Metrics
💰 Dividend Yield: 4.76% (Forward) | 6.31% (Trailing)
📈 5-Year Average Yield: 5.18%
🔄 Dividend Growth: Steady history with an annual dividend rate of $2.71
📊 Payout Ratio: 47.66%, indicating a sustainable payout level
📅 Ex-Dividend Date: March 28, 2025
💵 Next Dividend Payment: April 28, 2025
These figures paint a picture of a reliable dividend stock with a solid yield, sustainable payout, and room for future growth.
Dividend Overview
CIBC has been a consistent dividend payer for decades, making it a staple for income investors. Its current forward dividend yield of 4.76% is attractive, and the trailing yield of 6.31% looks even better—though it may be slightly elevated due to a recent drop in share price.
One of the biggest concerns with dividend stocks is whether the company can afford to keep paying out. With a payout ratio of 47.66%, CIBC is in a comfortable spot. This means the company is paying out less than half of its earnings as dividends, leaving plenty of room to reinvest in growth while rewarding shareholders.
For investors looking for stability, CIBC’s track record is reassuring. Canadian banks are known for their conservative approach to capital management, and CIBC is no exception. It has continued to pay dividends through various economic cycles, proving its resilience time and time again.
Dividend Growth and Safety
Dividend growth is just as important as the yield itself. A high yield is great, but if a company isn’t increasing its payouts over time, inflation can eat into purchasing power.
CIBC has steadily increased its dividend over the years, keeping up with earnings growth. While it may not be the most aggressive dividend grower among Canadian banks, its consistency is key. Investors who prioritize stability over rapid increases will likely appreciate this approach.
From a safety standpoint, CIBC has a strong balance sheet and operates in a well-regulated banking environment. Its return on equity (ROE) of 13.1% suggests that management is effectively using its capital to generate profits. With strong profitability and a manageable payout ratio, CIBC’s dividend looks secure for the foreseeable future.
Chart Analysis
Overall Trend
The chart shows that CIBC’s stock had a strong uptrend for most of the past year, peaking above 65 before losing momentum. The stock has recently broken below its 50-day moving average (orange line) and is now testing the 200-day moving average (blue line) around 56.80. The 50-day moving average has started curling downward, which suggests the short-term trend is weakening.
Moving Averages
A key technical signal here is the 50-day moving average crossing below the price action, a sign that momentum has shifted from bullish to bearish. The 200-day moving average is still rising, meaning the long-term trend remains intact, but the recent price action testing this level is critical. If the stock fails to hold this support, it could trigger further downside.
Volume Activity
Volume appears to have picked up on recent down days, indicating stronger selling pressure. Typically, when a stock declines with rising volume, it signals that investors are actively reducing their positions. This suggests that recent weakness isn’t just a minor pullback but a potential trend shift.
RSI Indicator
The relative strength index (RSI) at the bottom of the chart shows that the stock has moved toward oversold territory. When RSI drops below 30, it can indicate that selling may be overdone, and a bounce could be possible. However, RSI trends downward rather than stabilizing, which means there may still be room for more downside before a recovery.
Recent Price Action
Looking at the last five candles, there’s a clear pattern of lower highs and lower lows. The latest candle closed near the session low at 56.80, showing little buyer interest at the end of the trading day. The long upper wicks in previous sessions also indicate selling pressure whenever the stock attempted to move higher. This lack of strong buying momentum suggests the stock could struggle to find support unless sentiment shifts.
Analyst Ratings
Analysts have recently weighed in on Canadian Imperial Bank of Commerce (CIBC), offering a mix of upgrades and downgrades that reflect differing views on the bank’s future performance.
Upgrades
- 🟢 RBC Capital Markets
On February 28, 2025, RBC Capital Markets raised its price target for CIBC from CA$103 to CA$108 while maintaining an “Outperform” rating. This increase was driven by the bank’s strong earnings performance and improving operational efficiency. RBC analysts believe CIBC’s cost-cutting measures and digital banking expansion are setting it up for long-term growth. - 🟢 TD Securities
On August 8, 2024, TD Securities adjusted its rating on CIBC from “Hold” to “Buy” and increased its price target from CA$76 to CA$83. The firm cited CIBC’s strong mortgage lending division and improvements in wealth management as key factors behind the upgrade. Additionally, the bank’s use of AI-driven financial services was seen as a forward-looking strategy that could improve profitability.
Downgrades
- 🔴 Barclays
On March 3, 2025, Barclays raised its price target slightly from CA$85 to CA$88 but maintained an “Underweight” rating. Analysts at Barclays pointed to potential headwinds in the commercial lending segment and a slower-than-expected recovery in loan demand. They remain cautious about the impact of macroeconomic factors on CIBC’s balance sheet. - 🔴 UBS
On February 14, 2025, UBS adjusted its price target for CIBC from CA$102 to CA$96 while keeping a “Neutral” rating. The firm acknowledged CIBC’s stable revenue growth but expressed concerns over increasing provisions for credit losses, which could weigh on future earnings. UBS analysts noted that while the stock remains attractive for dividend investors, its growth potential may be limited in the near term.
Consensus Price Target
📊 As of the latest estimates, the average twelve-month price target for CIBC stands at approximately CA$93.50, indicating a potential upside of 12.52% from the current share price of CA$83.10.
These mixed analyst ratings reflect both the strengths and challenges CIBC faces, with bullish sentiment around cost-cutting initiatives and digital banking advancements but caution regarding loan growth and credit risk exposure.
Earnings Report Summary
CIBC’s latest earnings report showed solid results, with the bank posting a net income of C$1.52 billion for the fiscal first quarter. That translated to earnings per share (EPS) of C$1.54, and after adjusting for one-time items, the adjusted EPS came in at C$1.55. This was a welcome surprise for investors, as analysts had expected a lower figure of around C$1.38.
One of the standout performers this quarter was the Capital Markets division, which brought in C$619 million in net income. That’s a strong 19% jump from the same period last year. A mix of favorable market conditions, strong trading activity, and increased investment banking deals helped push those numbers higher.
Another positive takeaway was the decline in provisions for credit losses, which fell by C$12 million to C$573 million. This suggests that CIBC’s loan portfolio is holding up well and that fewer borrowers are struggling with repayments. Given the current economic climate, any sign of stability in credit quality is reassuring.
Overall, CIBC’s latest report paints a picture of a bank that’s managing well despite economic uncertainties. Strength in its Capital Markets business and lower loan loss provisions were key drivers of performance, and the better-than-expected earnings show that the bank remains on solid footing heading into the rest of the year.
Financial Health and Stability
When evaluating a dividend stock, financial stability is just as important as the yield.
💰 Total Cash Reserves: $291.33 billion
📊 Total Debt: $285.7 billion
📈 Operating Margin: 42.19%
💵 Profit Margin: 30.64%
CIBC’s cash reserves exceed its debt load, which is a good sign for long-term stability. However, one area that stands out is its operating cash flow of -$28.65 billion. Negative cash flow can be a red flag in some industries, but for banks, it often means they’re deploying capital into loans and investments. This isn’t necessarily a concern, but it’s something worth monitoring.
The bank’s ability to generate profits is also worth noting. A 30.64% profit margin and 42.19% operating margin suggest that CIBC is running a highly efficient business. As long as these numbers remain strong, the bank should have no trouble maintaining and even growing its dividend payments.
One potential risk factor is CIBC’s exposure to the Canadian housing market. A downturn in real estate prices could impact its mortgage portfolio, potentially leading to higher loan defaults. However, Canada’s banking system is tightly regulated, which helps mitigate some of these risks.
Valuation and Stock Performance
At a trailing price-to-earnings (P/E) ratio of 10.58, CIBC looks undervalued compared to historical levels. The forward P/E of 10.14 suggests that analysts expect earnings to grow in the near future, which is a positive sign.
Other key valuation metrics:
📉 Price-to-Book Ratio: 1.37 – Slightly above historical lows, indicating potential value
📊 Price-to-Sales Ratio: 2.90 – Reasonable for the banking sector
📈 52-Week Price Range: $46.50 – $67.45
Currently, the stock is trading closer to the lower end of its 52-week range. While this might concern some investors, it could also represent a buying opportunity for those looking to secure a higher dividend yield. If the stock rebounds, investors will not only benefit from dividends but also potential capital appreciation.
Risks and Considerations
Even the most stable dividend stocks come with risks, and CIBC is no exception.
📉 Interest Rate Sensitivity: Banks tend to perform better when interest rates are rising, but if rates stay too high for too long, it can slow down loan growth and impact profitability.
🏠 Real Estate Exposure: A downturn in the Canadian housing market could lead to higher loan defaults, which could pressure earnings.
📊 Stock Price Volatility: While dividends provide stability, stock prices can still fluctuate. CIBC’s beta of 1.11 suggests it moves closely with overall market trends.
💵 Regulatory Risks: The banking industry is heavily regulated, and changes in government policies or capital requirements could impact profitability.
While these risks are worth considering, CIBC’s strong financial position and long history of managing economic cycles suggest that it is well-equipped to navigate these challenges.
Final Thoughts
For income investors, CIBC remains an appealing choice. With a solid dividend yield, a reasonable payout ratio, and a history of consistent payments, it continues to be a strong player in the Canadian banking sector.
Stock price volatility and broader economic concerns, such as interest rate changes, could create some headwinds. However, CIBC’s strong margins, profitability, and cash reserves suggest that it is well-positioned to keep rewarding investors over the long run.
Those looking for a stable dividend stock with a solid track record will likely find CIBC to be a compelling option. While market conditions can change, its ability to generate strong cash flows and maintain steady dividends makes it an attractive pick for long-term income-focused portfolios.
Recent Comments