Chimera Investment Corporation (NYSE:CIM) has announced its latest dividend payment. The Board of Directors of Chimera announced that its fourth-quarter 2014 cash dividend will be $0.09 per common share. This dividend is in line with the prior quarter's payment. At the present share price of $3.23, the stock now yields 10.7%. This dividend is payable January 29, 2015, to common shareholders of record today, December 31, 2014. The ex-dividend date was December 29, 2014.
When I last covered Chimera in depth, I covered its industry leading net interest rate spread and stable book value. I predicted a good third quarter and feel that my expectations were met. I opined how I was also pleased with the dividend being maintained, and the fact that it is easily being covered by earnings and suspected this trend to continue. I assigned a buy rating on the stock and a $3.25 price target, and continue to feel good about that call. I also predicted the dividend would be maintained, if not raised, and with the present announcement, we see that indeed it was maintained.
While I would have liked to have seen a dividend hike, it is probably more prudent to wait for a few more quarters of action on the side of management to see what happens. Of course, the company is required to pay out at least 90% of its taxable income as dividends, so if things keep improving, either a raise or a special dividend payout is inevitable. And I think things can remain strong, and I expect a good fourth quarter. While interest rates have trended a bit lower, they have been relatively stable. Further, the company nearly quadrupled its income quarter-over-quarter. Chimera reported net income of $378 million, or $0.37 per average share, as compared to $67 million, or $0.07 per average share, last year, and was up from $105 million, or $0.10 per share, last quarter. Core earnings were $116 million, or $0.11 per share, for the quarter to $93 million, or $0.09 per share, for the quarter ended September 30, 2013. These earnings easily covered the quarterly dividend, as Chimera paid a common stock dividend of $0.09 per share for the quarter. I expect core income to exceed the dividend once again. The company also still trades at a 5% discount-to-book. Under $3.25, I want to be a buyer.
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