Excessive Dividend 50: Chimera Funding Company

Revealed on October twenty second, 2025 by Felix Martinez

Excessive-yield shares pay out dividends which might be considerably increased than the market common. For instance, the S&P 500’s present yield is barely ~1.2%.

Excessive-yield shares will be significantly useful in supplementing retirement earnings. A $120,000 funding in shares with a mean dividend yield of 5% creates a mean of $500 a month in dividends.

Chimera Funding Company (CIM) is a part of our ‘Excessive Dividend 50’ collection, which covers the 50 highest-yielding shares within the Certain Evaluation Analysis Database.

We’ve created a spreadsheet of shares (and intently associated REITs, MLPs, and many others.) with dividend yields of 5% or extra.

You’ll be able to obtain your free full checklist of all securities with 5%+ yields (together with vital monetary metrics reminiscent of dividend yield and payout ratio) by clicking on the hyperlink under:

 

Subsequent on our checklist of high-dividend shares to evaluation is Chimera Funding Company (CIM).

Enterprise Overview

Chimera Funding Company is an actual property funding belief (REIT) specializing in mortgage finance. The corporate primarily invests, via its subsidiaries, in a diversified portfolio of mortgage-related belongings, together with residential mortgage loans, non-agency RMBS, company CMBS, and different actual property securities. Chimera generates earnings primarily from the unfold between returns on its belongings and its financing and hedging prices.

To fund these investments, the corporate makes use of a mix of asset securitization, repurchase agreements, warehouse strains of credit score, and fairness capital. Presently, Chimera has a market capitalization of roughly $1.0 billion and is positioned as a outstanding participant within the specialty finance sector of the mortgage market.

Supply: Investor Relations

Chimera Funding Company reported Q2 2025 GAAP internet earnings of $0.17 per diluted share and earnings accessible for distribution of $0.39 per adjusted share. GAAP e-book worth was $20.91 per share, with an financial return of 0.5% for the quarter and 9.8% year-to-date. The corporate additionally introduced a definitive settlement to accumulate HomeXpress Mortgage, increasing its function from mortgage asset supervisor to originator.

The corporate’s diversified portfolio consists of residential mortgage loans, Non-Company and Company RMBS, Company CMBS, and MSRs. Internet curiosity earnings totaled $66.0 million, with different earnings of $1.4 million, whereas bills—together with compensation and transaction prices—have been $27.1 million. Non-GAAP measures, reminiscent of earnings accessible for distribution, exclude non-recurring objects to higher replicate distributable earnings.

As of June 30, 2025, Chimera held $14.86 billion in belongings, funded via secured financing, securitized debt, and fairness. GAAP leverage was 4.5:1, with a balanced mixture of fixed- and adjustable-rate belongings. These outcomes underscore Chimera’s technique of portfolio diversification, disciplined financing, and continued progress within the residential mortgage market.

Supply: Investor Relations

Progress Prospects

Chimera Funding Company has exhibited risky efficiency over the previous decade, characterised by stagnant earnings and a 10-year low in EPS in 2023. Excessive debt and rising rates of interest have uncovered the corporate’s vulnerabilities, and its complicated enterprise mannequin provides uncertainty. We challenge modest EPS progress of about 9% yearly over the following 5 years from this low base.

The REIT has traditionally supplied excessive dividends, starting from 9.2% in 2021 to 17.5% in 2009 and 2011, however earnings volatility and leverage make the payout unsure. Whereas Chimera continues to diversify and pursue strategic acquisitions, buyers ought to view its excessive yield as enticing but in addition think about it as a threat.

Supply: Investor Relations

Aggressive Benefits & Recession Efficiency

Chimera’s aggressive edge stems from its experience in mortgage credit score and a diversified portfolio that spans residential loans, Non-Company and Company RMBS, CMBS, and MSRs. Strategic acquisitions, reminiscent of HomeXpress and Palisades, improve its potential to originate, handle, and finance mortgage belongings.

Regardless of this, the REIT’s excessive leverage and rate of interest sensitivity have triggered uneven efficiency throughout downturns, together with a 10-year low EPS in 2023. Whereas diversification mitigates some threat, earnings stay weak in recessionary environments.

• 2008 earnings-per-share: $7.28
• 2009 earnings-per-share: $4.99
• 2010 earnings-per-share: $5.87

Dividend Evaluation

Chimera’s annual dividend is $1.48 per share. At its current share value, the inventory has a excessive yield of 11.6%.

Given the corporate’s earnings outlook for 2025, EPS is anticipated to be $1.55 per share. Consequently, the corporate is anticipated to pay out roughly 95% of its EPS to shareholders in dividends.

Last Ideas

Chimera has been considerably impacted by rising rates of interest, which have pushed it to close 23-year highs, leading to a 48% decline over the previous 5 years. If inflation eases, the inventory may generate a 12.8% common annual return over the following 5 years, supported by a 11.6% dividend and 9% earnings progress, partially offset by a 3.4% valuation headwind.

The corporate might rebound if the Fed cuts charges extra, however its risky efficiency, opaque enterprise mannequin, and vulnerability to extended downturns pose substantial dangers. Mixed with the historic underperformance of shares present process reverse splits, Chimera is greatest thought of a maintain for buyers who perceive and settle for its excessive threat.

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