4-Star Stocks Poised to Pop: Chimera Investment (CIM)

4-Star Stocks Poised to Pop: Chimera Investment

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, mortgage REIT Chimera Investment (NYSE: CIM ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Chimera's business and see what CAPS investors are saying about the stock right now.

Chimera facts

Headquarters (Founded)	New York (2007)
Market Cap	$2.71 billion
Industry	Mortgage REIT
Trailing-12-Month Revenue	$614.1 million
Management	CEO Matthew Lambiase CFO A. Alexandra Denahan
Trailing-12-Month Return on Equity	17.8%
Total Debt	$6.2 billion
Dividend Yield	19.7%
Competitors	Annaly Capital Management (NYSE: NLY ) Capstead Mortage (NYSE: CMO ) MFA Financial (NYSE: MFA )

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 96% of the 1,175 members who have rated Chimera believe the stock will outperform the S&P 500 going forward. These bulls include ballengerm and Speachless.

Just last month, ballengerm tapped Chimera as a particularly timely income opportunity: "Including dividends, this stock will outperform until 2013 when the Fed expects to raise interest rates. Cheap now too."

In fact, Chimera currently boasts a whopping dividend yield of 19.7%. That's higher than that of other mortgage REITs like Annaly (14.9%), Capstead (14.1%), and MFA (14.5%).

CAPS member Speachless elaborates on the Chimera bull case:

Buying this stock for the dividend. It is less highly leveraged than its peers in the REIT type business. Does non-conforming rather than sub-prime loans. I think the demand for those loans will continue to rise. I think that the Fed has let the horse out of the barn by saying interest rates will stay low for the next few years. I wish I had their crystal ball! Mine is still pretty cloudy, but since they control interest rates and that is the interest rate spread that makes Chimera money, so be it, let's make some money.

What do you think about Chimera, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Interested in another easy way to track Chimera? Add it to your watchlist.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool owns shares of Chimera and Annaly. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

Comments from our Foolish Readers

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Report this Comment On December 02, 2011, at 9:54 AM, kariku wrote:

Aaaaaargh ! Really ? You're so low ? You picked up probably the most beaten down stock, because it can only move up, especially with the general market optimism, and call it a pop ?
Say after me: nothing pops, these articles are just stupid.
Report this Comment On December 03, 2011, at 3:51 PM, geoflying wrote:

I just bought some CIM, figure it has taken a beating in price and should go up easier then down.
Report this Comment On December 05, 2011, at 3:24 PM, Teacherman1 wrote:

I bought it about 2 months ago, just to see what would happen when the Fed "twisted".
Since that time, it is down a penny, while the S&P is up over 8%.
I find it about as exciting as watching paint dry, and will probably sell it, just because I am tired of looking at it.
I hope for those who hold, or buy now, it goes up lke a "rocket", but I don't think it will.
JMO and worth exactly what I am charging for it.
Report this Comment On December 05, 2011, at 5:53 PM, tombyang wrote:

Hmm, Teacherman1, curious, would you consider this good, even given your down a penny price, if it could maintain the 19.7% dividend yield? I agree with your comment completely, just seeing if it would be worth another look purely from a dividend yield, minus all the 'popping'.
Report this Comment On December 05, 2011, at 7:01 PM, Teacherman1 wrote:

tombyang- If it could maintain that yield, that would be great.
I guess my concern is with possible changes in regulations, things can change quickly.
You might want to look a Jordan DiPietro's article that was just posted.
I am not, and do not pretend to be any kind of expert on REIT's.
My only experience with them is back in the 80's, when I bought a lot of their property for pennies on the dollar when they went bankrupt.
I don't have much, so might just hold it, but something is going on with them, and it is not clear what.
This probably didn't help, but probably didn't hurt either, since I see you red thumbed them. :)
Report this Comment On December 06, 2011, at 10:42 AM, Teacherman1 wrote:

tombyang - I didn't want to give the impression that I don't like them at all. It is just that even if they could maintain that dividend rate (and that is questionable), there are other opportunities that can give a better return for the money invested.
As an example, one of my picks ( I own all of my picks in real life ) is HERO. In the 8 or 9 weeks that I have owned it, I have made ( at least on paper, since I haven't sold ), a 60% return.
When I compare that to the yield on CIM, it is an easy choice for me to make.
Besides, companies like HERO are easier to understand, and don't have all of the "booby traps" that companies like CIM are subject to.
Cim is not even a "real reit", in the sense of what they have historically been. It is more like a finance company that is "playing the spread", and they don't control what happens with that spread.
If they are "nimble" enough, they can make money, but if things outside of their control suddenly change (and sooner or later they will), they can hit a wall and end up sliding down it like Jello; into a puddle on the floor.
JMO and worth exactly what I am charging for it.

updated 2 days ago Sponsored by:
	DOW	12,454.83	-74.92	-0.60%
	S&P 500	1,317.82	-2.86	-0.22%
	NASD	2,837.53	-1.85	-0.07%

CIM	$2.82		+0.03	+1.08%
Chimera Investment		CAPS Rating:

NLY	$16.70		+0.10	+0.60%
Annaly Capital Man…		CAPS Rating:

MFA	$7.73		+0.02	+0.26%
MFA Financial, Inc…		CAPS Rating:

CMO	$13.77		+0.01	+0.07%
Capstead Mortgage…		CAPS Rating:

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4-Star Stocks Poised to Pop: Chimera Investment

Comments from our Foolish Readers

Report this Comment On December 02, 2011, at 9:54 AM, kariku wrote:

Report this Comment On December 03, 2011, at 3:51 PM, geoflying wrote:

Report this Comment On December 05, 2011, at 3:24 PM, Teacherman1 wrote:

Report this Comment On December 05, 2011, at 5:53 PM, tombyang wrote:

Report this Comment On December 05, 2011, at 7:01 PM, Teacherman1 wrote:

Report this Comment On December 06, 2011, at 10:42 AM, Teacherman1 wrote:

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