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 3.3% is only a modest boost to shareholder returns.

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Canadian Imperial Bank of Commerce's Earnings Will Easily Cover The Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

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. Based on Canadian Imperial Bank of Commerce's last earnings report, the payout ratio is at a decent 45%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next 3 years, EPS is forecast to expand by 22.8%. Analysts forecast the future payout ratio could be 41% over the same time horizon, which is a number we think the company can maintain.

Check out our latest analysis for Canadian Imperial Bank of Commerce

Canadian Imperial Bank of Commerce Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2015, the dividend has gone from CA$2.12 total annually to CA$4.28. This means that it has been growing its distributions at 7.3% per annum over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Canadian Imperial Bank of Commerce has been growing its earnings per share at 16% a year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

We Really Like Canadian Imperial Bank of Commerce's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 13 Canadian Imperial Bank of Commerce analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Canadian Imperial Bank of Commerce not quite the opportunity you were looking for? Why not check out our selection of top 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.