雅虎香港財經 Is Chimera Investment Corporation (NYSE:CIM) the Best High-Dividend Penny Stock to Buy Now?
Dividend stocks are gaining momentum following major technology companies announcing their first-ever dividends this year. Americans are also starting to prefer dividend equities during the current inflation storm and expectations of a higher-for-longer scenario. In this environment affordable stocks that pay high dividends are in the limelight.
We recently covered some of the best high-yield penny dividend stocks to buy according to hedge funds. Chimera Investment Corporation (NYSE:CIM), being a notable name in the REIT industry, deserves special attention.
Chimera Investment Corporation (NYSE:CIM)
Number of Hedge Fund Investors: 18
Chimera Investment Corporation (NYSE:CIM) has a dividend yield of about 10% as of May 14. The stock is in the news after the New York-based company's board of directors announced a reverse stock split of the stock at a ratio of 1-for-3, effective market close of May 21.
During its latest earnings call earlier this month, Chimera talked about its dividend and financial situation:
"For the first quarter, our economic return on GAAP book value was 7% based on the quarterly change in book value and the first quarter dividend per common share. On an earnings available for distribution basis, net income for the fourth quarter was $31 million or $0.12 per share. Our economic net interest income for the fourth quarter was $68 million. For the first quarter, the yield on average interest-earning assets was 5.8%.
Our average cost of funds was 4.4%, and our net interest spread was 1.4%. Total leverage for the first quarter was 3.7:1, while recourse leverage ended the quarter at 0.9:1. For financing and liquidity, the company ended the quarter with $587 million in total cash and unencumbered assets. For hedging, during first quarter, the company exercised its two swaption contracts for $1 billion notional and entered into two separate one year swaps for a total of $1 billion notional at a weighted average 3.46% fixed pay rate. We added a new swaption contract with $500 million notional for the option to pay-fixed at 3.45% for one year beginning in January 2025. We had $1.7 billion floating rate exposure on our outstanding repo liabilities. We had $2 billion pay-fixed interest rate swaps at a weighted average fixed pay rate of 3.36% as a hedge position for our floating rate liabilities."
Image by Steve Buissinne from Pixabay
Chimera's 12-month price estimate set by Wall Street analysts is $5.25 while the stock was trading at around $4.48 as of May 14. This shows that the stock has an upside potential of 17%. However, unlike However, unlike Johnson & Johnson (NYSE:JNJ), Procter & Gamble Co (NYSE:PG) and Exxon Mobil Corp (NYSE:XOM), Chimera Investment Corporation (NYSE:CIM) is a small company with low hedge fund sentiment.
Is Chimera Investment Corporation Really The Best High-Dividend Penny Stock? Insider Monkey's research shows that there are 10 high-dividend penny stocks better than Chimera. Click to see 10 Best High-Dividend Penny Stocks Hegde Funds Prefer Over Chimera. Disclosure: None.
