4-Star Stocks Poised to Pop: Chimera


Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, mortgage REIT Chimera Investment (NYS: CIM) has 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 (2007)

Market Cap

$3.3 billion


Mortgage REIT

Trailing-12-Month Revenue

$621.6 million


CEO Matthew Lambiase

CFO A. Alexandra Denahan

Trailing-12-Month Return on Equity



$22.2 million / $6.2 billion

Dividend Yield



Capstead Mortgage (NYS: CMO)

MFA Financial (NYS: MFA)

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

On CAPS, 96% of the 1,044 members who have rated Chimera believe the stock will outperform the S&P 500 going forward. These bulls include zackp012 and All-Star TSIF, who is ranked in the top 0.1% of our community.

Earlier this week, zackp012 wrote that Chimera "will continue to benefit while foreclosures and unemployment remains high." Our CAPS member concludes: "It is an excellent dividend paying stock and should be able to maintain the payouts as long as the economy is in a downturn. I expect this to last for at least 3-5 more years."

In fact, Chimera currently sports a whopping dividend yield of 16.7%. That's higher than that of other mortgage-backed security managers such as Capstead (14.7%), MFA (13%), and Annaly Capital (NYS: NLY) (14.9%).

CAPS All-Star TSIF elaborates on the bull case:

Chimera Investments is part of a "newer breed" of REIT's that plays a little game with the interest spreads. ... One should never bank on a yield of any equity, especially a high flyer. The deck could fall. The risk reward seems good here and while a dividend payer that doesn't also have share price appreciation is a tough pick here on CAPS to beat the S&P ... the compounding will evenentually work in my favor. The cheaper I can get the equity, the higher the interest, the sooner I compound my way to a bigger moat. ... Again, in the long run, the risk/reward does cause the teeter totter to wobble, but I'll take my chances that I'm on the right side. I'll see you in 2-3 years and we'll see how this play works out.

What do you think about Chimera, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Chimera Investment and Annaly Capital Management. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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