December 10, 2018

CIBC (CM)

 

 

The Canadian Imperial Bank of Commerce (CM) commonly referred to as the CIBC, is another of Canada’s “Big Six” banks.  It became the large conglomerate that it is today on June 1, 1961.  On this date the Canadian Bank of Commerce (established in 1867) and the Imperial Bank of Canada (established in 1865) merged together to form the CIBC.  It has been a major player on the Canadian banking scene from the time it was established as a country.  The company is heavily concentrated in Canada, but also has branches in the Caribbean and a minor prescence in Asian markets.  It has more than 42,000 employees worldwide that run more than 1,100 branches and service more than 11 million clients.  Their market capitalization was about $30.7 billion at the end of last quarter.

 

CIBC CMCIBC (CM) chooses to categorize its business ventures into two main divisions: CIBC Retail Markets and Wholesale Banking.  The Retail Markets division offers the personal banking options that most banks are known for including loans, mortgages and personal investment services.  The Wholesale Banking branch offers the full range of services specific to corporate banking and capital markets.

 

Recently, CIBC (CM) CEO Gerry McCaughey made news when he announced that the bank would be expanding into the USA with a buyout of the American equities company American Century Investments (formerly owned by JP Morgan Chase).  He told reporters that, “I believe that U.S. equities are going to be the asset class of choice in the years to come.”  This move comes on the heels of notable acquisitions by several of Canada’s other banks.  The move typifies the reputation that CIBC has amongst the Canadian banks as being the one that is exposed to the most risks.  This is also why it got hit the hardest coming off of the recent market downturn in 2008.

 

While the CIBC (CM) is still a strong dividend option, it is routinely ranked in the bottom 1-2 when comparing the big Canadian banks.  Their reputation for taking risk has hurt them in the past, but some investors believe that it will eventually pay off and that the stock is currently undervalued.  It has a current Price-to-Earnings ratio of 11.91 and a dividend ratio of 4.7%.  Those are definitely attractive financials, but my instinct would be to go with one of the bigger, and better-managed Canadian banks on the market.  I just place a high value on stability if I am looking for a dividend-paying stock for the long-term.  The other option is to simply buy a Canadian ETF (most Canada ETFs consist of 30-40% bank holdings) or an ETF that targets only the Canadian financial industry.

TSE CM

 

CM Dividend Metrics

Ticker Name Dividend Yield Payout Ratio DEBT_TO_MKT_CAP Dividend Growth 5 years Dividend Growth 1 years
CM Canadian Imperial Bank of Commerce/Canada 4.22% 59.13% 1.39 5.05% 0.00%

 

 

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  1. […] used to be called, “The Big 5,” which included the Royal Bank of Canada, Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, Bank of Montreal, and the Bank of Nova Scotia.  These days the National Bank of Canada is usually […]

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