Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.

Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Canadian Imperial Bank in Focus

Based in Toronto, Canadian Imperial Bank (CM) is in the Finance sector, and so far this year, shares have seen a price change of 0.65%. The bank and financial services company is currently shelling out a dividend of $0.69 per share, with a dividend yield of 4.31%. This compares to the Banks - Foreign industry's yield of 3.7% and the S&P 500's yield of 1.49%.

Taking a look at the company's dividend growth, its current annualized dividend of $2.74 is up 3.3% from last year. In the past five-year period, Canadian Imperial Bank has increased its dividend 5 times on a year-over-year basis for an average annual increase of 5.05%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Canadian Imperial Bank's payout ratio is 49%, which means it paid out 49% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, CM expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $5.49 per share, representing a year-over-year earnings growth rate of 0.92%.

Bottom Line

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, CM is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).

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