Chimera Investment (NYSE:CIM)

CAPS Rating: 3 out of 5


Player Avatar TSIF (99.96) Submitted: 11/9/2011 7:50:52 PM : Outperform Start Price: $1.78 CIM Score: +16.39

I've played Chimera Investments before, but exited looking for a lower entry. It's a pure dividend play that works best from the lowest possible entry. Overall, however, the risk has been growing in leveraged REIT's. CIM in particular continues to issue massive quantities of stock to leverage even deeper and dividends may not make up for share price drops from further dilution. One might also see a reverse split on this one to get the share price back up. Reverse splits are usually a negative catalyst the first few weeks after they occur.

There have been several cycles of serious dips, a few that I made good entries into, but I'm not patient enough to wait for another.

Dividend plays do best when:
1. They hold their dividends!
2. The S&P is stable or declining, certainly not when it's on a tear.
3. When held for several years and LEFT alone to "mature" from dividend reinvestment...if they stay solvent.

Report this Post 4 Replies
Member Avatar stockstar69 (38.65) Submitted: 11/30/2011 2:45:43 PM
Recs: 0

Thanks for writing me. Starting out, I was going to invest in Analy. In retrospect I probably should have. I am a conservative investor. I really prefer long term dividend stocks. Safe. This is my very first dip into the world of the R.E.I.T.s. I do not know too much about investing in general. I seldom subtract from my initial basket(portfolio) of stocks/bonds. I reasoned that CIM(bought at $2.90 per share) is somewhat covered by Analy(unofficially), the price was much lower than Analy and the interest somewhat higher. Since I am retired(gardener), I have to be careful how and what I invest in as my dividends are now a large part of my living wage. I know that I am taking a chance with CIM. I hope that I'm not making a mistake. Caveat emptor.

Member Avatar TSIF (99.96) Submitted: 11/30/2011 5:27:23 PM
Recs: 0

stockstar69, annaly has been more stable during the rough patches. Both are below book value, so not a bad entry point. The concern with REIT's is the stability of the dividend. I think CIM has gotten through a rough patch it was going through and the books seem stable. I believe you are fine for a few quarters with either, but you do want to keep one eye on your investments while you're working in your own/friends garden. I would guess that once a gardener, always a gardener!!! ;)

The markes are going to stay "rough" for sometime. There is a fine line between holding through and folding and if you are counting on income from your investments there may not be opportunity for you in folding. A good gardner does watch for infestations, excessive weeds, diseased plants, and other signs that it's time to take action. All the best. May your investments be as green as your garden!

Member Avatar stockstar69 (38.65) Submitted: 12/8/2011 12:58:00 PM
Recs: 0

Thanks for the good vibes, TSIF.
I read somewhere that the Gov't of ours let some information slip...I forget what it was exactly however the article mentioned that now Cimera/Analy AND STOCKS OF ITS ILK would be worth keeping for a year or two. Which is exactly what you said.

Yesterday I purchased a couple hundred shares of Telecom New Zealand. (SYMBOL/NYSE--NZT)
I feel confident about this purchase vis a vi this companies past, present and future.


Member Avatar TSIF (99.96) Submitted: 12/8/2011 5:18:57 PM
Recs: 0

Hi Stockstar69, I had NZT on my watchlist since it plummeted last month after it announced the spinoff of Chorus. I held as it was too hard to figure what the value of the spinoff was. Caps also doesn't do well with recalculating after spinoffs. It appears the price has settled down and factored in at this point. The dividend, however, that looks exciting now will have to be adjusted, but I think should stay decent. New Zealand is doing well overall. I think it's a good investment now that the dust is down, but it could sell down a little more if the market doesn't like the new dividend scale when it's decided. They can't expect 13.5% to hold, but some investors aren't realistic!

I think that waht you are referring to concerning the government is that they indicated they plan to leave interest rates alone for quite sometime. This was greeted as both good news and bad news. If they keep interest rates low then it will help Mortgage REIT's who make their money from interest rate spread. The bad news was that it indicated that the FED thought the economy would "lag" for sometime to come. Most likely an honest assessment, but not one the markets like to hear.

The Feds help control interest rates, but they will drift on other catalysts. Also if any signs of inflation flare they will have to reevaluate their postion.

Keep the weeds out of your portfolio!!!

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