I do not own this stock of Canadian Imperial Bank of Commerce (TSX-CM, NYSE-CM). This was the only Canadian Bank of the big 5 that I did not follow, so I thought I should start to follow it.
When I was updating my spreadsheet, I noticed dividend increase for the 2019 financial year was at 5.26% which is lower than the 5 year average of 7.28% per year. However, the increase for the 2019 financial year (5.26%) is higher than that for the 2018 financial year I4.72%). Also, the total return per year over the past 5 years is low at 6.42% with 1.59% from capital gains and 4.83% from dividends. Most of the return is in dividends.
The dividend yield for this stock is currently in the good range (5% or higher), but has spent most of the time in the moderate range (2% to 4% ranges). The 5, 10 and historical dividend yields are 5%, 4.79% and 4.38%. The dividend growth has recently been low (below 8%) but it has been higher and similar in the past. See chart below.
The Dividend Payout Ratios are fine. The DPR for EPS for 2019 was 50% with 5 year coverage at 47%. The DPR for CFPS for 2019 was 43% with 5 year coverage at 44%. I like to see this last one at 40% or less. The DPR for Free Cash Flow for 2019 was 29% with 5 year coverage at 20%. The FCF Dividend Coverage Ratio for 2019 was 3.48.
Debt Ratios are fine. For banks, I look at the Debt/Covering Assets Ratio which for 2019 was 0.90. The Liquidity Ratio is not important for banks. The Debt Ratio for 2019 is 1.06 and this is fine for banks. The Leverage and Debt/Equity Ratios for 2019 were at 18.32 and 17.23 respectively. These are fine for banks but might be a little on the high side.
The Total Return per year is shown below for years of 5 to 32 to the end of 2019. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2014 | 5 | 7.28% | 6.42% | 1.59% | 4.83% |
| 2009 | 10 | 4.87% | 9.80% | 4.72% | 5.08% |
| 2004 | 15 | 6.43% | 12.42% | 6.46% | 5.95% |
| 1999 | 20 | 8.01% | 11.01% | 5.87% | 5.13% |
| 1994 | 25 | 8.93% | 13.57% | 7.69% | 5.88% |
| 1989 | 30 | 7.61% | 12.44% | 7.23% | 5.21% |
| 1987 | 32 | 7.40% | 12.07% | 7.05% | 5.02% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 7.79, 9.04 and 10.66. The corresponding 10 year ratios are 9.14, 9.98 and 10.73. The corresponding historical ratios are 8.34, 9.73 and 11.00. The current P/E Ratio is 9.20 based on a stock price of $108.60 and 2020 EPS estimate of $11.80. This stock price testing suggests that the stock price is relatively reasonable and below the median if judged by the 10 year ratios.
I get a Graham Price of $146.82. The 10 year low, median, and high median Price/Graham Price Ratios are 0.84, 0.92 and 0.99. The current P/GP Ratio is 0.74 based on a current stock price of $108.60. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Book Value per Share Ratio of 1.92. The current P/B Ratio is 1.34 based on a stock price of $108.60, Book Value of $35,569M and a Book Value per Share of $79.87. The current ratio is 29% below the 10 year median P/B Ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 4.38%. The current dividend yield is 5.30% based on dividends of $5.76 and a stock price of $108.60. The current yield is 21% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 4.79%. The current dividend yield is 5.30% based on dividends of $5.76 and a stock price of $108.60. The current yield is 10.6% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 2.52. The current P/S Ratio is 2.51 based on 2020 Revenue estimates of $19,247M, Revenue per Share of $43.22 and a stock price of $108.60. The current ratio is 0.5% below the 10 year P/S Ratio. This stock price testing suggests that the stock price is relatively reasonable and at the median.
Results of stock price testing is that the stock price is cheap to reasonable. The P/S Ratio testing is showing that the stock price is very close to the median. The dividend yield test is always interesting because dividend increases show how the company’s executive feel about the future. Dividend increase in the 2019 financial year was higher than in the 2018 financial year. The historical dividend yield test says that the stock price is cheap. The 10 year median dividend yield test says that the stock price is reasonable and below the median.
Is it a good company at a reasonable price? I think it is a dividend growth stock and dividend growth stocks are good ones for anyone portfolio. This is not my favourite bank, but I think that it is selling at a reasonable price.
When I look at analysts’ recommendations, I find Buy (1), Hold (13), Underperform (1) and Sell (1). The consensus would be a Hold and most analysts seem to be there. The 12 month stock price consensus is $112.88. This implies a total return of 9.24% with 5.30% from dividends and 3.94% from capital gains.
See what analysts are saying on Stock Chase. This bank does not excite anyone. Victoria Hetherington on Motley Fool thinks there are reasons to pause rather than purchase this bank. A writer on Simply Wall Street says the Intrinsic Value of this stock is $156.21 CDN, but is worried about growth. A writer on Simply Wall Street thinks this banks is a stable dividend paying, but it is unexciting.. Christopher Mengel on Modern Reader says this bank earns a negative media score by InfoTrie Sentiment Analysis.
Canadian Imperial Bank of Commerce is Canada's fifth- largest bank, operating three business segments: retail and business banking, wealth management, and capital markets. It serves approximately 11 million personal banking and business customers, primarily in Canada. Its web site is here Canadian Imperial Bank of Commerce .
The last stock I wrote about was about was National Bank of Canada (TSX-NA, OTC-NTIOF) ... learn more. The next stock I will write about will be Transcontinental Inc (TSX-TC.A, OTC-TCLAF) ... learn more on Wednesday, January 22, 2020 around 5 pm. Tomorrow on my other blog I will write about Banks and Ratios.... learn more on Tuesday, January 21, 2020 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
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You certainly give a lot of detailed information on the stocks you cover. But why do you say that you would never want to own CM? we have held it since 1996 and are very happy with the consistent dividends.
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