Market News

CIBC Stock (TSE:CM) Now Yielding 5.7% Following Q4 Earnings Plunge

Story Highlights

CIBC’s Q4-2022 results disappointed investors, sending the stock 7.7% lower on the day. However, it now has a 5.7% dividend yield following the share price drop combined with a modest dividend hike.

Earlier today, the Canadian Imperial Bank of Commerce (TSE:CM) (NYSE:CM), also known as CIBC, reported its Q4-2022 financial results, which missed both revenue and earnings-per-share (EPS) expectations. As a result, the stock finished 7.7% lower. However, the bank increased its annualized dividend from C$3.32 per share to C$3.40. Following the dividend hike and the stock’s sell-off today, it now yields 5.7% on a forward basis. Given its 46.3% payout ratio, which suggests that the dividend is safe, dividend investors may want to take a closer look at the company.

CIBC’s revenue reached C$5.39 billion compared to the consensus estimate of about C$5.59 billion. Also, its adjusted earnings per share were C$1.39, missing the C$1.72 consensus estimate and down from the C$1.68 per share recorded in the same period last year. Despite rising interest rates, which are generally thought to benefit the profitability level of banks, CIBC’s net interest margin fell by 10 basis points to 1.33%.

Further, CIBC’s adjusted return on equity fell to 11.2% from 14.7% last year. Additionally, CM failed to meet its 2022 annual EPS growth target of 5% to 10%, as adjusted EPS fell by 2% for the full year compared to 2021. However, its three-year and five-year EPS growth rates met the low end of the target.

Is CM Stock a Buy, According to Analysts?

According to analysts, CM stock comes in as a Moderate Buy based on just five Buys and four Hold ratings given in the past three months. The average CM stock price target of C$72.56 implies 21.3% upside potential.

Conclusion: CIBC’s Results Disappointed, but Its Dividend Won’t 

CIBC’s results missed expectations, but analysts expect upside potential from here. Historically, the company has always bounced back from tough periods, meaning that it may be a good time to look into the stock. The 5.7% dividend yield is also sizeable enough to make many income investors happy.


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