A 3.2% Dividend Stock Paying Immense (Safe!) Cash

What makes a dividend stock look safe is not just a juicy yield. It’s a mix of durable earnings, a manageable payout ratio, strong capital levels, and a business that keeps making money through different market conditions. That is why banks so often work for income investors. They lend, collect fees, manage wealth, and return cash to shareholders, all while operating under strict capital rules. In this bank’s case, the forward dividend yield sits around 3.2%, and the payout is backed by a business still generating plenty of profit.

CM

Canadian Imperial Bank of Commerce (TSX:CM) is one of Canada’s largest banks, with businesses spanning personal and business banking, wealth management, capital markets, and U.S. commercial banking. Therefore it’s not relying on one single engine. When one area cools, another can often help carry the load. For investors, that makes it a practical dividend stock rather than a flashy one.

Over the last year, the big story has been steadier execution and stronger revenue across the bank. CIBC stock’s latest quarter delivered record revenue in all of its business units, with capital markets standing out in particular. That is a nice shift from the more cautious tone banks had when credit concerns were louder and market activity was weaker.

There has also been a shareholder-friendly pattern here. CIBC stock’s annual dividend has continued to move higher, and the stock’s current dividend is at $4.28 annualized on the Canadian listing. This is not one of those high-yield names that looks generous only because the market is terrified, but a lower-drama bank dividend story, and sometimes that is exactly what investors want.

Into earnings

The earnings picture looks strong. In the first quarter of 2026, CIBC stock reported net income of $3.10 billion, up from $2.17 billion a year earlier. Earnings per share rose to $3.21 from $2.19, while CIBC stock’s own release highlighted record revenue across every business unit. Adjusted results were also solid, showing that the bank’s momentum was not just a one-off accounting quirk.

The balance sheet helps the “safe cash” case too. CIBC stock reported a CET1 ratio of 13.4% at January 31, 2026, up from 13.3% the prior quarter, along with a leverage ratio of 4.4% and a liquidity coverage ratio of 133%. In short, the bank still has a healthy capital cushion. Ideal, as safe dividends usually start with a bank that can absorb stress without needing to panic.

The valuation still looks reasonable. CIBC stock trades at about 13.8 times trailing earnings, with a forward dividend yield of roughly 3.18% at writing. That is not bargain-basement cheap, but it is also not stretched for a major Canadian bank delivering stronger profits and maintaining healthy capital levels. The obvious risks are the usual ones: credit losses can rise, loan growth can slow, and capital markets can cool. Still, CIBC stock does not need perfection to remain attractive. In fact, even a $7,000 investment can do some damage with passive income from dividends alone.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTCM$132.1152$4.28$222.56Quarterly$6,869.72

Foolish takeaway

Looking ahead, CIBC stock fits as it offers something many investors actually need: meaningful cash that still looks safe. It has a diversified banking model, improving earnings, solid capital, and a dividend that does not appear overextended. It may not be the highest-yielding stock on the TSX, but for investors who want income they can feel comfortable holding for years, CIBC stock looks like a very strong choice.

The post A 3.2% Dividend Stock Paying Immense (Safe!) Cash appeared first on The Motley Fool Canada.

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More reading

• 5 Canadian Dividend Stocks That Could Grow Your Paycheque Over Time
• CIBC Just Posted Record Revenue. So Why Does the Stock Still Look Cheap?
• CRA: How to Use Your TFSA Contribution Limit in 2026

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.