NYMTG - Chimera Investment Q4: Mixed Results, Worst Is Over
2025-03-07 09:24:05 ET
Summary
- Chimera Investment Corporation had mixed results for Q4, showing a net income loss, however covering the dividend.
- The market price is higher than book value, reflecting negative investor sentiment created by a history of dividend cuts.
- Acquisition of the Palisades Group provides future catalysts for income and stabilization of the portfolio.
- The outlook is positive as interest rate cuts and the upside of the Palisades acquisition provide tailwinds for performance.
- In this article, I cover the reasons why existing CIM shareholders should Hold vs. selling now.
I rate Chimera Investment Corporation (NYSE: CIM ), a Hold, for income focused investors interested in investing in mortgage real estate investment trusts (mREIT). Although the dividend yield of 10.65% is appealing, CIM has a history of poor performance over the long term. The company may have a chance to reverse fortunes, but considering the challenges ahead, I do not advise investors to buy shares if you don’t already own it. If you do own shares, I recommend holding, possibly reinvesting the dividends to lower your base. The most important factors that influence my opinion of the stock are:
- Annual dividend yield of 10.65%
- Estimated quarterly payout of $0.37 will go ex-dividend around 3/30.
- Market price of $13.82 is below book value of $19.72.
- Acquisition of Palisades Group diversifies the portfolio, with full benefit to come in the future.
- Trend of increasing equity and declining delinquency rates on home mortgages