CM could go to $80No question the dividend is safe. But the yield isn't high enough. Interest rates in Canada goig higher (as it is lower than in the US). Risk premium for all equities going up. BMO already yielding 4.2% vs. CM at 3.3%. The yield isn't enough, especially since earnings going down near-term (and that's excluding the writedowns coming).
CM should trade at no more than 10X EPS right now. This year it is expected to be $8.00 before writedowns. I can't see how EPS in 2008 is going to be higher than this year as the collapse of U.S. mortgage market and private equity will reduce fees of all kinds (not even talking about writedowns).