Canadian Imperial Bank of Commerce (TSE:CM) Is Increasing Its Dividend To CA$1.07

The board of Canadian Imperial Bank of Commerce (TSE:CM) has announced that it will be paying its dividend of CA$1.07 on the 28th of January, an increased payment from last year's comparable dividend. Despite this raise, the dividend yield of 3.4% is only a modest boost to shareholder returns.

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Canadian Imperial Bank of Commerce's Payment Expected To Have Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive.

Canadian Imperial Bank of Commerce has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 46%, which means that Canadian Imperial Bank of Commerce would be able to pay its last dividend without pressure on the balance sheet.

The next 3 years are set to see EPS grow by 11.5%. Analysts forecast the future payout ratio could be 43% over the same time horizon, which is a number we think the company can maintain.

See our latest analysis for Canadian Imperial Bank of Commerce

Canadian Imperial Bank of Commerce Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from CA$2.12 total annually to CA$4.28. This works out to be a compound annual growth rate (CAGR) of approximately 7.3% a year over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Canadian Imperial Bank of Commerce has impressed us by growing EPS at 16% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

Canadian Imperial Bank of Commerce Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 12 analysts we track are forecasting for Canadian Imperial Bank of Commerce for free with public analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.