what does anyone think of the Motley Fool commentary? If it's true, then most of the dividends were gained through selling stock in the company, not true profits. Given this, then there would appear to be two consequences: either fraud or what happend when they cannot sell more stock to maintain profits. Like I said before, before anyone rips me a new one, this is speculative thinking based soley upon MF's recent commentary.
The Motley Fool commentary is completely off base. Taxable earnings, which haven't changed, drive dividends. If CIM had paid dividends out of investor funds, such would have been revealed in the instructions on tax treatment for dividends paid in 2011. Since all 2011 dividends were taxable at ordinary rates for the recipients, they were paid from profits. From that one can conclude that if CIM had used the revised accounting guidance since formation, the dividends would have been the same, else CIM would have lost its REIT status. Motley Fool is either trying to depress the stock price, or they're really stupid.
Please be aware that CIM's mortgage portfolio increased after each stock sale without increasing leverage. The funds obviously were used to buy RMBS. The kid who did the Motley Fool Video couldn't help but smile when he came up with his conclusion that the proceeds from stock sales were used to pay dividends. It looks like the Video was just a high school prank.