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Canadian Imperial Bank of Commerce (TSE:CM) Is Increasing Its Dividend To CA$0.87

Canadian Imperial Bank of Commerce's (TSE:CM) dividend will be increasing from last year's payment of the same period to CA$0.87 on 28th of July. This makes the dividend yield 6.0%, which is above the industry average.

See our latest analysis for Canadian Imperial Bank of Commerce

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

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

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. Taking data from its last earnings report, calculating for the company's payout ratio shows 65%, which means that Canadian Imperial Bank of Commerce would be able to pay its last dividend without pressure on the balance sheet.

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Over the next 3 years, EPS is forecast to expand by 54.0%. The future payout ratio could be 62% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

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Canadian Imperial Bank of Commerce Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the annual payment back then was CA$1.80, compared to the most recent full-year payment of CA$3.48. This implies that the company grew its distributions at a yearly rate of about 6.8% over that duration. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

Canadian Imperial Bank of Commerce May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. Canadian Imperial Bank of Commerce hasn't seen much change in its earnings per share over the last five years.

Our Thoughts On Canadian Imperial Bank of Commerce's Dividend

Overall, this is a reasonable dividend, and it being raised is an added bonus. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Canadian Imperial Bank of Commerce that investors should know about before committing capital to this stock. Is Canadian Imperial Bank of Commerce not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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