cim stock chart

CIM Stock Crashes. Is Chimera A Buy?

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.

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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…

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  • 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.)
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