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Chimera Investment Corporation Message Board

  • Need_High_Yield Need_High_Yield Mar 20, 2010 4:15 AM Flag

    Dividends Dates

    Sorry to say most of your replies were dead WRONG!

    For an investor the Record date mean NOTHING except to determine the ex-dividend date.

    The ex-date is set by the exchanges, not the companies. It is USUALLY and NORMALLY two business days before the Record date but that is NOT always the case, especially in the case of a very large extraordinary dividend.

    So you can buy a stock 1 minute before the close on the day and BEFORE the ex-dividend date and you will be holder of record on the record date. You can sell at the Open on the ex-dividend date and you will receive the dividend!

    Anyone buying on the ex-dividend date will not receive the dividend.

    Thus, you neither have to have a trade settled by the ex-dividend date nor do you have to hold your shares any longer than the open on the ex-dividend date to get the dividend.

    I am a former stockbroker and have been investing for over 40 years.


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    • thanks for you sharing your wisdom. there seems to not be a lot of that around.

    • sgreg67 Mar 25, 2010 12:50 AM Flag

      Did the after hours buys this eve qualify as todays buys? Price indicated yes?

    • sgreg67 Mar 24, 2010 3:48 PM Flag

      Article on Seeking Alpha convinced me of solid diverse nature of CIM. I'm in at 4.055.

    • sgreg67 Mar 24, 2010 2:41 PM Flag

      So could a wave of mortgage defaults hurt this dividend big time?

    • Your welcome greg, I am a dividend investor and it doesn't matter what stock you go to you always have some people with all kind of wild statements about ex-dividend dates. Sometimes I think it's just shorters and daytraders just trying to cause confusion to drive the price down. Sometimes companies do come out with special dividends that have different rules but they are usually specified in the company press releases.

    • Thank you 'bobtrend' for info.

    • What does the Ex-dividend Date mean?

      The ex-dividend date is the day on which all shares bought and sold no longer come attached with the right to be paid the most recently declared dividend. This is an important date for any company that has many stockholders, including those that trade on exchanges, as it makes reconciliation of who is to be paid the dividend easier. Prior to this date, the stock is said to be cum dividend ("with dividend"): existing holders of the stock and anyone who buys it will receive the dividend, whereas any holders selling the stock lose their right to the dividend. On and after this date the stock becomes ex dividend: existing holders of the stock will receive the dividend even if they now sell the stock, whereas anyone who now buys the stock now will not receive the dividend.

      It is relatively common for a stock's price to decrease on the ex-dividend date by an amount roughly equal to the dividend paid. This reflects the decrease in the company's assets resulting from the declaration of the dividend. The company does not take any explicit action to adjust its stock price; in an efficient market, buyers and sellers will automatically price this in.
      What do the Record Date and Payment Date mean?

      Shareholders who properly registered their ownership on or before the date of record will receive the dividend. Shareholders who are not registered as of this date will not receive the dividend. Registration in most countries is essentially automatic for shares purchased before the ex-dividend date.

      The payment date is the day when the dividend checks will actually be mailed to the shareholders of a company or credited to brokerage accounts.

      • 1 Reply to rjmcbear
      • Afraid to say it again but even that site is also WRONG!

        You quote from it: "It is relatively common for a stock's price to decrease on the ex-dividend date by an amount roughly equal to the dividend paid. This reflects the decrease in the company's assets resulting from the declaration of the dividend. The company does not take any explicit action to adjust its stock price; in an efficient market, buyers and sellers will automatically price this in."

        While the opening price is influenced by buyers and sellers as the opening price is every trading day, however, the opening price on the ex-dividend date is actually reduced by the amount of the dividend by the exchange specialists (now computers) and by the market makers.

        In addition, any standing limit buy orders from investors in the specialists book or with the market makers will automatically be reduced by the amount of the dividend unless you specifically place your order with instructions not to reduce the price you are willing to pay by the amount of the dividend (DNR).


    • Jon K,

      You sound like you know what you're talking about. I have never owned a dividend yeilding stock so help me understand. With this stock paying out such a monster dividend why would I not want to own it. It seems like a no-brainer. It's almost too good to be true - what am I missing? Thanks in advance.

      • 3 Replies to detzelp
      • Detzelp,

        It is the whole risk reward thing. Typically when a stock is paying over 6% divy the market is betting that they can not continue to pay the divy and you risk the stock getting crushed. The long term ability of a stock to pay a divy is free cash flow. Some companies pay a high divy, but pay it with debt, that is a huge warning sign. Also check out the payout ratio, if it is too high that is another sign. IE if payout ratio is over 100 that means they are paying out more in divy then the company is taking in. What should the payout ratio be? That depends on the industry, structure of company (reit vs norm) and you own comfort level.

        Bottom line, best advise in life and investing is if something does not make sense follow the $$

      • Hi,

        You ask: "What are you missing"

        I am afraid quite a bit. Yes, RISK is the simplistic answer.

        However, one must look at a lot more than yields to choose stocks.

        CIM is a mortgage REIT. Mortgage because mortgages and mortgage securities are the primary investments they hold to make money. They are a REIT in that the have elected to pay out at least 90% of their TAXABLE income to largely avoid paying income taxes on their profits.

        There are more than 50 other mortgage REITS that trade in the public markets. Some have higher yields than CIM, many have lower yields and some that used to pay high yields in the past are now in bankruptcy.

        IMO, there are three main things to check with mortgage REITS or MREITS for short before investing.

        (1) What type of mortgage instruments is the MREIT holding? Different types have different risks associated with them.

        (2) How much debt leverage is the MREIT utilizing, that is how much debt to equity? (I use total liabilities plus the liquidation preference of any preferred stocks divided by the shareholders equity. Some investors must assume the money preferred shareholders pay for their stock was a donation to the common shareholders as they include that in the common equity in doing their calculations, and

        (3) At what price are the shares trading at in relation to the book value of the MREIT. Since MREIT mark their investment holdings to market value, unlike most other corporations, the book value is a pretty good indicator of the current value of the MREIT per share. Unfortunately we only get to know the book values four times per year when the earnings are released.

        After that there are a slew of items to check as to the quality of earnings, etc. etc.

        So, absent knowing even the basics of MREITs, you are simply gambling, sight unseen, IMO. Buying high yield has been the demise of many novice investors.

        Learn first, then invest. A bull market like we have had the past year will hide a lot of mistakes that likely come to roost when the market turns down.


      • "Whatr Am I Missing"?.......RISK!!!

    • Need! Great to see you back.

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