Topic: Dividend Stocks

Canadian Imperial Bank of Commerce $77 – Toronto symbol CM

CANADIAN IMPERIAL BANK OF COMMERCE $77 (Toronto symbol CM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 392.7 million; Market cap: $30.2 billion; Price-to-sales ratio: 2.0; Dividend yield: 4.5%; TSINetwork Rating: Above Average; www.cibc.com) is Canada’s fifth-largest bank, with total assets of $352.0 billion.

CIBC continues to expand its main retail-banking business, which is less volatile than its trading activities. Retail banking now accounts for 74% of CIBC’s business, up from 69% a year earlier. The bank aims to raise this to 75%.

This focus on retail banking is paying off. In fiscal 2010, CIBC’s earnings jumped 125.6%, to $2.3 billion. It earned $1.0 billion in fiscal 2009. Earnings per share rose 121.5%, to $5.87 from $2.65, on more shares outstanding. If you exclude several one-time items, including writedowns of securities the bank holds, earnings per share would have risen 9.8%, to $6.37 from $5.80.

Loan-loss provisions fell 36.6% in fiscal 2010, to $1.0 billion from $1.6 billion. Revenue rose 21.7%, to $12.1 billion from $9.9 billion.

CIBC’s shares have gained 15% in the past year. But they still trade at just 10.6 times the $7.24 a share that the bank will probably earn in 2011.

CIBC is a buy.

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