The coronavirus pandemic is destroying real estate stocks like Chimera Investment Corporation (NYSE: CIM). CIM stock lost 20% yesterday and is trading at 6.50. CIM has lost nearly 70% since the start of COVID-19 in March.
Investors may be looking at CIM stock because it is technically oversold and pays a high dividend. This may ask if CIM stock is a buy. Unfortunately, CIM stock is not a buy because:
- Mortgage foreclosures are expected to increase both for commercial and residential properties dramatically.
- Dividend payments will most likely be suspended or significantly reduced.
Chimera Investment Corporation, founded in 2007 and headquartered in New York, operates as a real estate investment trust (REIT) in the United States. CIM, through its subsidiaries, invests in a portfolio of mortgage assets, including both commercial and residential mortgage loans, agency mortgage-backed securities secured by pools of commercial mortgage loans, commercial mortgage loans, and other real estate-related securities.
Chimera has elected to be taxed as a REIT and is not be subject to federal income tax if CIM distributes at least 90% of its REIT taxable income to its shareholders.
Stock Market Morning Report
S&P futures are higher, up 15 to 16 points, as…
- The White House is said to be developing a plan to restart the U.S. economy that involves coronavirus testing and focusing on small cities first.
- Former Federal Reserve Chairman Ben Bernanke said he doesn’t anticipate a “V-shaped” recovery and thinks the economy will be in a better place in a year or two.
- Bridgewater Associates founder Ray Dalio said cash has a negative return, and investors are better off in assets that hold value when so many countries are printing money.
- President Donald Trump said the U.S. is approaching the top of the “coronavirus curve,” implying data may soon begin to ease.
European markets fell as…
- European Union finance ministers failed to agree on a coronavirus stimulus package though the group anticipates a deal will come together by Easter.
- Italy’s new coronavirus cases remained below the March 21 peak for the sixteenth consecutive day and fell on Monday for the third consecutive day.
- Spain’s new coronavirus cases rose for the first time in four days but remained below the March 26 peak for the twelfth consecutive day.
- The European Central Bank told European finance ministers the region could need as much as $1.6 trillion in stimulus.
Asian markets were mixed as…
- Chinese government advisers are suggesting Beijing should lower its annual growth, enabling it to save additional stimulus support in case the economy were to deteriorate further.
- Japanese markets rallied on follow through from the government having announced stimulus plans.
- Australia’s credit rating outlook was cut from stable to negative by Standard & Poor’s Global Ratings.
- Australia’s Prudential Regulation Authority told banks they should suspend dividends to preserve capital.
And ahead of…
- Energy Information Administration Crude Oil Inventory Data (10:30 a.m.)
- FOMC Minutes (2 p.m.)