Is CIM's dividend sustainable? If so, can you send me some references e.g. urls to support your position(s).
Thank you very much. I appreciate all of the help, becuase at $4.21/share a low p/e ratio and a high dividend my borker tried to talk me out of buy into CIM for the reasons I listed above (and please no bad comments about my broker...they really have my best interest at heart, but I need to show them proof that CIM was a good investment).
Your broker is a used car salesman. He has his best interest at heart not yours.
you need to get in the real world. Today with ameritrade etc . why pay a broker.
are you not able to type in an "x" under buy and the number of shares . or sell
you have to get real here. brokers work for the brokerage firm not you.
he is a salesman. he didn't adopt you
CIM owns Mortgages. They borrow money at the current very low short term rates and use the money to buy mortgages with higher, fixed, long-term rates. This, like all investments, has risks. The risk for CIM is that short term rates will rise and long term rates will rise, at the same time. When this happens, the mortgages CIM holds will drop in value and CIM will have an unrealized, but marked-to market loss. That will drop the value of the stock, perhaps substantially. The difference between the cost of their funds and the returns they receive determines how much money they earn, At present this difference is hugh, but it will change, and almost certainly be smaller in the future.
Your broker knows this, but he/she is not watching your stock every day. The number of stocks a broker can actively watch is very limited, first hand. I can handle about 12 with good over-sight and another 10 at low level. If you broker is already monitoring a dozen stocks for another client, he/she probably cannot start monitoring CIM for you without neglecting another customer's stock. If you are a medium-sized client, with perhaps $500,000- $1,000,000, that might be OK. for the broker.
Yes, the broker is trying to good for you, but needs to balance that with other client's needs.
You can do better than the broker, but only if you have the time, interest, and willingness to learn.
One note on P/E...CIM has a low P/E compared to other REITs and compared to what they are selling for and what they are paying out in dividends, you have to scratch your watch and wind your butt and wonder why is it this way, i.e. low price share, but high dividends, whereas it is just the reverse for other REITs?
Food for thought and I am hungry for the knowledge of my fellow investors.
A couple of things. I do not own CIM but have considered it. I have owned Annaly (NLY) which I have own for about 4 years and picked up with a dividend rate over 16%. The only problem is I did not buy enough of it! Has been steady, grown a bit and a great dividend. NLY spun off CIM and has an interest in it. James Grant of the Interest Rate Observer likes it and so does Bill Gross. So, I am not answering your question directly as I have hesitated on CIM. I would suggest taking at look at American Capital as well. I hope this helps. Jim
Since you can post questions here, I would guess you are not computer phobia.
Why not push yourself a little bit further and open an online trading account like Schwab/Ameritrade/ETrade...?
Then you need not spend time to argue with your brokers.
Unfortunately, this Yahoo message board offers little search capability, otherwise, there are lots of useful information posted here by other users including me for FREE.
In the other places, they are going to charge you tons of money for the information posted here.
I own CIM and it has been, in my opinion, just ok..You raise a good question as to the sustainability of the dividend. As you know, cost of money has been really low which gives the mortgage industry a good spread between cost of funds and return on loans. Since it is difficult to predict when the cost of funds will rise enough to reduce the interest margin we can, at such time, see the dividend to shareholders reduced...maybe in the next 12 - 24 months..I'm probably going to sell all or some part of my CIM holdings after the upcoming dividend and move to closed-end funds with monthly dividends. This doesn't have enough Appreciation for me although it has a good dividend and appears to have satisfactory financials. This only one persons opinion...hope i have helped..good luck.