So many ups and downs lately which provided me great buying opportunities of purchasing great dividend stocks that are on my watch list. I love short term declining volatility as I am confident that the overall market will eventually recover and be better. I have no idea where the market will go and so many professional analysts won’t know either. I never time the market. I just look through the companies that are on my watch list and purchase them when I have some capital to deploy if their current prices seem attractive.
I was on purchasing spree last 3 weeks. As I mentioned in my previous posts, I purchased 270 shares of Ensign Energy Services Inc (ESI) which will add $130 to my annual dividend income, 225 shares of Canadian Western Bank (CWB) which will add $190 to my annual dividend income and 71 shares of Home Capital Group Inc (HCG) which will add $63 to my annual dividend income.
Today, I will introduce you Canadian Imperial Bank of Commerce, CIBC (CM). I purchased 24 shares at $91.90 which will add $102 to my annual dividend income.
This is one of the most well-known Canadian banks that is even extremely popular in US investors due to its strong business model. CIBC provides retail and business banking, wholesale banking and wealth management. CIBC has over 1,100 branches and has paid dividend about 150 years. That alone should give it an award for keeping investors happy over a decade and keeps counting. Let’s go over a bit more details of why I love CIBC and can’t have enough of its shares as a long term passive dividend income investor.
1. PE ratio of very low 12.50, a forward looking PE ratio of even lower at 10.0. Currently traded at very close to 52 weeks low ($88- $107)
2. The dividend yield is at 4.5% per year and its payout ratio is about 54% which is in line with other big 5 Canadian banks.
3. Annual average dividend growth rate over 10 years is 5.5% and it recently increased its quarterly dividend payout from $1.03 to $1.06 per share. It has increased its dividend from $1.64 per share in 2002 to $4.01 in 2014. That’s 140% increase during 12 years. It survived through various crash and constantly increased its dividend during that time and continued its growth over a decade. Would it continue? I strongly think so.
4. CIBC reported stronger than expected 2015 Q1 earnings. Considering the current economic environment, that is an outstanding performance on their end. CIBC’s strong presence in retail banking (65% of revenue is from Canadian retail operation) as well as strict loan and mortgage policies (66% of mortgage is ensured) enabled them to perform better than their peers in this challenging environment.
1. CIBC stocks as well as other big 5 major banks stocks are in downward trend and Canadian major banks consider 2015 to be a tough year to grow.
2. CIBC’s strong Canadian retail presence is the biggest weaknesses that I can think of. It is very connected to Canadian housing market. Real estate in Canada (especially in Alberta, BC and Ontario area) has increased about 40% since last correction and all the media is screaming and worrying about record high debt level of Canadians. With 1-2% of increase of interest rate will directly damage CIBC’s performance. Some analysts are worried that small increase in the rate may pop the bubble and bring down Canadian economy with it.
I think CIBC is an excellent stock to buy and forget if you are a long term investor. Purchase it and check every once in a while to see whether it keeps paying you 4.5% of dividend. As long as it pays you that juicy dividend and provides you capital gains on top of it then that’s all you need to justify why you purchased this amazing stock. Sit back and enjoy continuous stream of cold hard cash.
My purchase of CIBC stocks will add $102 to my annual dividend.
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