Real estate investment firm Chimera Investment Corporation (NYSE: CIM) offers one of the richest dividend yields on the market today. Among 1,200 mid-cap or larger dividend payers, Chimera's 10.8% yield sits among the 20 most generous yields right now. In other words, this dividend stock beats 99% of its peers when it comes to pure dividend-yield generosity.

But you know that old saw: The bigger they are, the harder they fall. So investors must ask whether Chimera's rich yield looks stable for years to come -- or perhaps it's destined to fall.

Looking at the dividend payout ratio is one good starting point for a deeper dividend analysis. So how does Chimera fare under that harsh light?

CIM Total Dividends Paid (TTM) Chart

CIM Total Dividends Paid (TTM) data by YCharts

Over the last 52 weeks, Chimera has paid out dividends totaling $0.56 per share. This sum includes a special dividend of $0.20 per share, which management saw as a better alternative to issuing new mortgage-backed securities in 2013. Not counting that unusual blip on the radar, Chimera's quarterly dividend payments have held steady since 2012, at $0.09 per share.

Over the first three quarters of 2014, Chimera reported net income of $583 million and paid out $483 million as dividend checks. That amounts to an 83% payout ratio, down from 96% for the same period in 2013.

Now, real estate investment trusts like Chimera must distribute 90% of their taxable income in the form of dividends. Not doing so would lead to paying income tax, forfeiting the benefits of being a REIT in the first place.

The simple takeaway
So Chimera offers a rich dividend today, using the bare minimum of its taxable income to qualify for a tax-free status. That's standard operating procedure for a REIT, and Chimera is actually one of the healthier examples of this business models.

The firm has taken a conservative approach to its operations, and managed to hold its quarterly dividend checks steady in a low-interest era when many other REITs had to reduce their payouts.

These sky-high dividend payout ratios may look scary at first glance, but in this line of business, that's just how things are done. In the REIT sector, investors should worry more about lowGAAP payout ratios than overly high ones.

But that's not the whole story.

Where's the cash?
You see, Chimera's GAAP earnings are not the same as its actual cash flows. The company often reports wildly different figures on the net income and free cash flow lines -- and serious investors prefer to look at cash over accounting-based profits, any day of the week.

Looking back at the last four reported quarters, Chimera generated $655 million of net income but only $241 million in free cash flow. So the GAAP-based dividend payout ratio may be a roomy 88%, but the cash payout ratio stops at a massive 239%.

That's right -- Chimera allocates more than twice its available free cash flows to the dividend budget.

This is not new. The company's cash payout ratio stood at 121% at the end of 2013 and 123% in 2012, for example. Chimera typically funds some of its dividends from sources outside free cash flows, which makes many income investors nervous.

The real takeaway
Chimera's dividend structure is more complicated than it looks. The company's cash flows often zig while the income statement zags, leaving investors scratching their heads over the future direction of this real estate investment trust.

That being said, the company rests on a portfolio of securitized mortgage properties that was assembled at low cost in the wake of the 2008-2009 market meltdown. The assets have been distilled and refined many times over, and what remains is a robust, low-risk financial platform. The wobbly income and cash flow lines are the result of management trying to purify the portfolio even further, so that Chimera would be able to buy another round of discounted mortgage assets in case we run into another housing-market correction.

So you should take the dividend payout ratios as a measure of Chimera's relative lack of operating freedom. The company must stay above that 90% GAAP payout ratio line each year, or risk losing its REIT status. But the same policy also puts heavy pressure on the cash flows. Without the strong fundamental platform of post-2008 mortgage assets, Chimera's dividend would strike me as very risky.

With it, this stock is a judgment call for dividend investors. In our CAPS system, Chimera rates a middling 3 stars out of 5, indicating that your fellow investors are on the fence as well.

Do your homework before backing up the truck to this stock, dear Fool.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.