Chimera [CIM] announced a lower dividend of 14 cents for Q1 2011, down from the previous several quarters at 17 cents. Yield is now just about 13%, instead of the previous 16%. Ouch, because this was exactly a day after I bought at 4.20, and the price dropped to 4.12 on the news. That's a 2% drop in price on a 17.5% drop in the dividend.
I do still like these guys because they are doing smart things, and their leverage ratio remains under 2x. Compare with AGNC which is running between 7x and 8x leverage.
Update Mar 29
CIM went ex-dividend today, and dropped from 4.18 to 4.02. Maybe the impending dividend was part of why the dividend cut didn't have as much of an impact on the price. I will be watching for the price to go down because people are getting out.
Also, not CIM directly, but mortgage REITs in general "got Cramered" today. On his lightning round, Cramer mentioned AGNC and said "I don't understand how they can pay that yield." Now a lot of people listen to Cramer, but not all of them do what he recommends. People know he's full of crap. The point is that a lot of people watch his show, read his blog, or the zillion others that just repeat "what Cramer said today." The story is coming up on the google news feed for a lot of mREIT shares. It's exposure, and we know that (in the short term) the market is a popularity contest. Exposure leads to popularity.
Something else: I've noticed that TheStreet.com has been posting news stories when the mortgage REITs are about to go ex-dividend. Saw this with AGNC a week ago, and now CIM. The result seems to be a much sharper drop on the ex date - previously, it would take a day or two or three from the ex date before the price would drop and bottom. On these two most recent ones the price opened sharply lower on the ex date, and settled quickly from there.
It seems this would make my short-across-the-dividend idea work better, and more quickly. Stay tuned for more on this idea.
No comments:
Post a Comment