matdesign24 Chimera Investment Corporation ( NYSE: CIM ) preferreds Chimera Investment Corporation PFD SER B ( NYSE: CIM.PR.B ) and Chimera Investment Corporation 8% PFD CUM SER D ( NYSE: CIM.
PR.D ) look quite appealing as a means of generating very high dividend income, as they have current yields in excess of 11% and are well covered by both assets and cashflows. When fixed income instruments yield over 10% it is usually due to abnormally high risk, but the nature of the high yield here came about in a different fashion.
These are supposed to yield 8% and I believe they have the risk level that would be appropriate for an 8% dividend preferred. However, due to the unique environment and the specific wording of these preferreds as they were issued, they are now yielding over 11%. As such, I believe buying CIM preferreds today gets investors a highly favorable reward-to-risk ratio.
This article will discuss a variety of factors regarding investment in CIM preferreds: Fixed-to-floating structure, which resulted in an unusually high yield. Fundamentals of the underlying company to discern the level of risk for preferreds. The preferred stack - which is best.
Capital appreciation potential. Redemption opportunity/risk. Fixed to floating structure and how yield got so high CIM Preferred B was issued in February 2017 with a coupon of 8%.
It sold well, with CIM able to issue $325 million worth of the B series. It was a fixed-to-floating security, where it would become a floating ra.