![]() The pay-out ratio in 3Q-22 was 85.2%, down from 106.5% the previous quarter.Ĭhimera Investment's total dividend payout over the last twelve months (4Q-21 to 3Q-22) was 85.3%, so the lower quarterly dividend of $0.23 per share seems sustainable. Interest Rates () Dividend Coverage May ImproveĬhimera Investment's dividend policy change improved the trust's pay-out ratio in the third quarter, and the trust is likely to have better coverage in the fourth quarter. I believe the central bank will raise interest rates to a range of 5.00-5.50% by the end of the year, up from a current rate range of 4.25-4.50%. Since the central bank has begun its most aggressive rate hike cycle in decades, I believe that rate hikes in 2023 will continue to put pressure on Chimera Investment's book value. Chimera Investment's falling book value in 2022 is primarily due to the central bank's aggressive approach to interest rate hikes.Ĭhimera Investment's GAAP book value as of Septemwas $7.44 per common share, down 37.2% from the end of 2021, when it was $11.84 per common share. ![]() Portfolio/Book Value Likely To Remain Under Pressure In 2023Ĭhimera Investment, like the majority of mortgage trusts, has seen steep book value declines in 2022 as a result of the factors outlined in the introduction. In my article Chimera Investment: A Dividend Cut May Be Coming, I highlighted the risk of Chimera's dividend policy, pointing to the trust's failure to earn its dividend with distributable earnings.Ĭhimera Investment's dividend coverage deteriorated in 2022 due to rising interest rate volatility and increasing pressure on the book values of MBS-linked investment portfolios, raising the risk of a dividend cut.Ĭhimera Investment finally reduced its quarterly dividend from $0.33 per share to $0.23 per share in the fourth quarter, aligning its new dividend with lower distributable earnings. I wouldn't buy Chimera Investment's 12.9% dividend yield right now because I believe the trust's book value per share will fall further. The rise in interest rate volatility and the widening of MBS credit spreads have put a significant strain on the mortgage trust's portfolio, and the Fed is expected to continue steepening the yield curve in 2023. The mortgage trust's book value has plummeted in 2022 as a result of the central bank's aggressive interest rate hikes aimed at bringing inflation back under control. It is also focused on investing in securities issued in various collateralized debt obligation (CDO).Chimera Investment Corporation ( NYSE: CIM) reduced its dividend payout by 30% in the fourth quarter to align it with lower distributable earnings. ![]() The Company is focused on investing in commercial mortgage loans consisting of first or second lien loans secured by multifamily properties. It also invests in investment grade, non-investment grade and non-rated non-agency RMBS. ![]() These mortgage loans are secured primarily by residential properties in the United States. The Company invests in residential mortgage loans through secondary market purchases from banks, non-bank financial institutions, and the agencies. Financials : Mortgage Real Estate Investment Trusts (REITs) | Small Cap Value Company profileĬhimera Investment Corporation is a real estate investment trust (REIT) that is primarily engaged, through its subsidiaries, in the business of investing in a diversified portfolio of mortgage assets, including residential mortgage loans, agency residential mortgage-backed securities (RMBS), non-agency RMBS, agency commercial mortgage-backed securities (CMBS), and other real estate-related assets. ![]()
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