Canadian Imperial Bank of Commerce's (TSE:CM) Upcoming Dividend Will Be Larger Than Last Year's

Canadian Imperial Bank of Commerce's (TSE:CM) dividend will be increasing from last year's payment of the same period to CA$0.97 on 28th of January. The payment will take the dividend yield to 4.1%, which is in line with the average for the industry.

Check out our latest analysis for Canadian Imperial Bank of Commerce

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

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Having distributed dividends for at least 10 years, Canadian Imperial Bank of Commerce has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Canadian Imperial Bank of Commerce's payout ratio of 49% is a good sign as this means that earnings decently cover dividends.

The next 3 years are set to see EPS grow by 16.8%. Analysts forecast the future payout ratio could be 51% over the same time horizon, which is a number we think the company can maintain.

Canadian Imperial Bank of Commerce Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of CA$1.96 in 2014 to the most recent total annual payment of CA$3.88. This works out to be a compound annual growth rate (CAGR) of approximately 7.1% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

We Could See Canadian Imperial Bank of Commerce's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Canadian Imperial Bank of Commerce has been growing its earnings per share at 5.3% a year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

We Really Like Canadian Imperial Bank of Commerce's Dividend

Overall, a dividend increase is always good, and we think that Canadian Imperial Bank of Commerce is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Canadian Imperial Bank of Commerce that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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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.