This Bank Stock Could Turn 182 Shares Into $13,490 in 2023

Now before I begin, I definitely recommend long-term investing as the prime focus for investors. That’s even when you’re considering cheap stocks on the TSX today. Even so, right now is a good time to know what you’re getting into over the next year.

So today let’s look at a safe stock that’s bound to recover after a downturn. One that could turn your investment into serious returns by the end of 2023.

CIBC stock

The stock I’m going to discuss today is Canadian Imperial Bank of Commerce (TSX:CM). CIBC stock is a stellar choice because it’s so cheap. But it’s also a strong choice because it’s a Canadian bank. Canadian banks are quite different from their American counterparts. There is an oligopoly in Canada that allows these banks to rake in cash and save provisions for loan losses.

This is especially important for CIBC stock, which has large exposure to the Canadian market. Plus, shares dropped as the company came out with a statement recently that sent investors into a panic. Investors believed an email was meant to tell them their guaranteed investment certificates (GIC) could change with 30 days’ notice. However, CIBC stock clarified it would not be making changes, and the email was simply to demonstrate the ease of email notifications during this trying economic period.

Even so, this has created a strong jumping in point for investors. CIBC stock now trades at 10.9 times earnings, with shares down 20% in the last year. You can therefore bring in a 6.12% dividend yield as of writing.

Historic growth

Now, if you’re going to substantially grow your investments, it’s important to look at the past performance of CIBC stock. In this case, the bank has managed to recover to pre-fall prices within a year of hitting 52-week lows.

This happened even during the Great Recession, when shares of CIBC stock and other banks dropped by about 40%. Yet again, CIBC stock jumped back within a few months. So with shares down 20%, and perhaps they could fall further, you’re still likely to see them recover to pre-fall prices even before 2023 is out.

Why? Economists remain divided as to whether a recession will even happen at this point. And that alone is good news, because should a recession indeed come it’s likely to be incredibly mild. That gives you even more reason to purchase these safe bank stocks like CIBC stock that are bound to recover quickly at the end of this downturn.

What’s more, 2023 is set to end on a bull market. While the summer could be difficult, by fall there is likely to be a sustained rebound. Yet, I would still get in on CIBC stock now. The main reason? Bringing in that solid dividend yield that you can use to reinvest in the stock over and over again.

Let’s look at the next few months

I’m now going to break down what your returns might look like over the next few months. Let’s say you purchase CIBC stock today and we see shares drop a further 10%. I do not think that’s likely, but it could happen. Even so, by the end of 2023, your shares could climb back to pre-fall prices. Meanwhile, you can use your dividend income to reinvest back into CIBC stock over the next several quarters.

Below, I’ll break it down from a $10,000 investment in CIBC stock today.

As you can see, the first four months might be rough. But by the end of 2023, you could be up $3,490 by reinvesting dividends throughout the year. And honestly, this to me is a worst-case scenario if CIBC stock drops another 10%. You could certainly make even more in returns in 2023.