With a relief rally in Canadian banks and the overall market for that matter gripping investors, many may now be wondering if now is the time to grab some very decent dividend yields as the market appears to be calming down.
Like its peers, Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) has traded sideways in recent years. The company has not really been participating in these significant upward market momentum we’ve seen, to the chagrin of many investors. That said, the company’s mid to high-digit single-dividend yield continues to be appealing.
The threat of major dividend cuts by major Canadian banks remains low. Investors seeking dividend safety may, unsurprisingly, choose CIBC’s yields over other companies offering similar yields for this reason.
Significant macroeconomic headwinds for the Canadian financial sector are unlikely to abate. However, CIBC and its peers do have solid balance sheets and excellent long term track records of dividend growth. These are factors that enhance what many investors already see as significant capital appreciation upside right now.
Profits are on the decline and provisions for loan losses are up. Investors interested in CIBC or its peers are making a bet that the sector will not see a 2008-style collapse anytime soon. While further downside may be on the horizon, I’d encourage investors to consider CIBC as a solid long-term dividend stock to put in a core income portfolio at these levels.
Invest wisely, my friends.
