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Chimera Investment Corp.: This 7.7%-Yielding Preferred Stock Is Worth A Shot

Published Wed, 11 Jul 2018 10:52:30 -0400 on Seeking Alpha

Chimera Investment Corp. (CIM) is a high-yielding mortgage REIT that has issued both common and preferred shares. The mortgage REIT's common shares currently offer investors a 10.6 percent yield, but shares have proven to be volatile, thus reflect a high degree of risk. Chimera Investment Corp.'s preferred stock layer, on the other hand, allows investors to dial down investment risk while still capturing attractive dividend income. An investment in Chimera Investment Corp.'s preferred stock - which I discuss in this article - comes with a dividend yield of 7.7 percent.
About six weeks ago I penned an article on Chimera Investment Corp. titled "Chimera Investment Corp.: 10.9% Covered Yield And Affordable Valuation" in which I recommended the mortgage REIT as a "Buy for Income and Capital Appreciation" for investors with an above-average risk tolerance. Investors with a more moderate risk tolerance, however, may want to pass on the mortgage REIT's common shares, and take a look at the 8.00% Series B Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock (CIM.PRB).
Chimera Investment Corp. regularly accesses the capital markets and issues preferred shares as a way to diversify its funding sources. The mortgage REIT issued the Series B Fixed-to-Floating Preferred Stock in February 2017.
Source: Chimera Investment Corp. Investor Presentation
Preferred shares are attractive income vehicles because they offer a couple of... Read more