Based on the aggregated intelligence of 165,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, mortgage REIT Chimera Investment (NYSE: CIM) 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 City (2007)

Market Cap

$3.44 billion


Mortgage REIT

Trailing-12-Month Revenue

$543.1 million


CEO Matthew Lambiase

CFO A. Alexandra Denahan

Trailing-12-Month Return on Equity



$236.2 million / $3.8 billion

Dividend Yield



Capstead Mortgage (NYSE: CMO)

MFA Financial (NYSE: MFA)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 96% of the 633 members who have rated Chimera believe the stock will outperform the S&P 500 going forward. These bulls include pjmalloy and Buzzworthy1.

Just last month, pjmalloy brought some inside information to our community's attention:

Insiders are buying which is a bullish signal. Worst is behind the company and the company will get stronger as housing market improves. Stock is trading at a very low P/E and is set to rebound.

Like its parent company, Annaly Capital (NYSE: NLY), which was singled out as an 11 O'Clock Stock pick earlier this month, Fools continue to like Chimera as a play on today's super-low interest rate environment. Specifically, Chimera uses short-term financing to purchase longer-term mortgage-backed securities, making money off the difference, or "spread", between the two. And with the stock sporting a whopping dividend yield of 17.5%, significantly higher than several of its rivals like Capstead (12.2%) and MFA (10.5%), Chimera offers a relatively juicy bet, as well.

CAPS member Buzzworthy1 elaborates:

I can tell you that non-agency RMBS [residential mortgage-backed securities] is currently out of favor, and [Chimera] is able to take advantage of this and purchase these assets at a deep discount. ...

Granted, mortgages are garbage right now, but [Chimera] can pick top quality credit tiers in the securities they purchase. If RMBS were to take another hit, [Chimera] could suffer significant losses via writedowns but not losses like they sustained in 2008 since they have deleveraged since then. ...

Since [Chimera] profits from the positive spread or carry between short term and longterm rates, the next couple of years should be handsomely profitable for [Chimera]. ... Given the massive issuances of US Treasuries and the Fed's heavily bloated balance sheet, mathematically rates on the long-end of the yield curve are bound to rise sooner than later. [Chimera] is benefitting from the Fed's extended low interest rate policy.

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