Is Cherry Hill Mortgage Investment Corporation (NYSE:CHMI) A Smart Pick For Income Investors?
A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. Over the past 4 years, Cherry Hill Mortgage Investment Corporation (NYSE:CHMI) has returned an average of 11.00% per year to shareholders in terms of dividend yield. Does Cherry Hill Mortgage Investment tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. View our latest analysis for Cherry Hill Mortgage Investment
Here’s how I find good dividend stocks
If you are a dividend investor, you should always assess these five key metrics:
Is its annual yield among the top 25% of dividend-paying companies?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has the amount of dividend per share grown over the past?
Is its earnings sufficient to payout dividend at the current rate?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Cherry Hill Mortgage Investment fit our criteria?
Cherry Hill Mortgage Investment has a trailing twelve-month payout ratio of 37.51%, which is rather low compared to other REITs. Generally, REITs are expected to pay out the majority of its earnings to provide a regular income stream for their investors. In the near future, analysts are predicting a higher payout ratio of 94.47%, leading to a dividend yield of around 11.56%. However, EPS is forecasted to fall to $2.44 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. This also brings about uncertainty around the sustainability of the payout ratio. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. The reality is that it is too early to consider Cherry Hill Mortgage Investment as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. In terms of its peers, Cherry Hill Mortgage Investment generates a yield of 11.56%, which is high for Mortgage REITs stocks.
Next Steps:
If Cherry Hill Mortgage Investment is in your portfolio for cash-generating reasons, there may be better alternatives out there. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three fundamental aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for CHMI’s future growth? Take a look at our free research report of analyst consensus for CHMI’s outlook.
Valuation: What is CHMI worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether CHMI is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
