Hi Lou,
In Sept 2014 CIBC was near $107 so I held off buying thinking it would go down. I was right. It is now about $20 off it's high. Is this a good time to buy? It has also raised it's dividend. I also thought of buying BMO and waited for the same reason.Which generates more income for same amount invested?
As a senior who needs income from dividends I am not sure which bank is best.
Thank you for your thoughts.
Sandra
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Hey Sandra,
Thanks for the assignment. This will be the third time since 2010 that I commit to a study of the charts for Canadian Imperial Bank of Commerce (CM TSX). The last was on September 28, 2012. The shares were trading for $77.27, the dividend yield was 4.86%, and Susan wanted to know if she should book some profits.
The research conducted on her behalf indicated that the shares had been trading in a range since June of 2011 with support at $70.00 and resistance at $78.00. It was advised that the best approach would be to trade the stock in the range and wait for a breakout. At the time the momentum indicators were signalling a pullback.
By July of 2013 CM broke out of the range with conviction and established a new uptrend that took the shares to a 52-week high of $107.37 by early December of 2014.
Another review of the charts will help identify how best to manage this stock.
The three-year chart points to a stock that has been under selling pressure for the last nine months. The MACD and the RSI have generated a number of profitable buy and sell signals since the stock hit the 52-week high last December. Worth noting is the down channel that started in May of 2015 as the stock met resistance along the 200-day moving average. The gap down in late August would be attributed to the panic selling that swept through global markets on growth concerns emanating from China.
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The six-month chart pulls the down channel into focus as well as the resistance along the 200-day moving average. The RSI and the MACD both signalled buys as CM touched its 52-week low of $83.10 in late August. What is evident is that the bounce off the lows has taken the stock to a retest of support along the 200-day moving average.
My thoughts on this stock as with Canadian bank stocks in general is that they should be accumulated over time. Buy some now and continue to buy over your investment horizon. Market volatility not withstanding, it's hard to find companies which have the kind of advantages that Canadian banks enjoy.
Currently the dividend yield is 4.77%. If you were to invest $1 million in this stock today you would generate $47,700 in dividend income per year.
You asked which of Bank of Montreal (BMO TSX) or CM would pay the greater dividend. BMO's dividend yield is 4.73%, which gives CM a very slight advantage.
Next time I will examine BMO to conclude your request.
Make it a profitable day and happy capitalism!