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Chimera Investment Corporation Message Board

  • b_hummell b_hummell Mar 28, 2011 1:13 PM Flag

    Is CIM a Good Investment

    I useed to like CIM but now I decided not to buy back in.
    1. Dividends have declined last few quarters
    2. Share price is on downward trend. Even with
    today being the last day to pick up the 0.14
    dividend, Buyers are only paying 4.18-4.19 per
    share. Recently on the day before ex div, Buyers were paying up to 4.32 per share.
    3. Using the current 0.14 div x 4 quarters,=
    0.56. Based on share price of 4.00, a 14% dividend rate. CIM was paying a div rate of 20% not too long ago & is now down to 14%.
    4. Because CIM is not gov't backed & guaranteed
    , unlike NLY & AGNC, CIM and other similiar REIT's generally need to pay a higher dividend rate to offset there having greater risk. At 14% dividend, why own CIM when you can buy safer REIT's (gov't guaranteed) paying higher dividend yields.
    5. All the SPO's did not lead to higher dividends. Appears they only diluted EPS thereby lowering dividends
    6. CIM paid out dividends in 2010 at slightly over 100% and was unsustainable. Appears the SPO's propped up the dividends rather than adding to earnings to offset the dilutions.

    I believe CIM, at the 0.14 dividend per quarter, is worth approx 4.00 per share and no more for now,
    Even at that price, I prefer a gov't backed/duaranteed ( and safer) RET like NLY or AGNC which pays the same or higher dividend rate

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