Capstead Mortgage Corporation (NYSE: CMO) and Chimera Investment Corporation (NYSE:CIM) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, valuation, earnings, analyst recommendations, institutional ownership, profitability and risk.
Insider and Institutional Ownership
70.6% of Capstead Mortgage Corporation shares are held by institutional investors. Comparatively, 50.8% of Chimera Investment Corporation shares are held by institutional investors. 1.7% of Capstead Mortgage Corporation shares are held by insiders. Comparatively, 0.7% of Chimera Investment Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Risk & Volatility
Capstead Mortgage Corporation has a beta of 0.3, indicating that its share price is 70% less volatile than the S&P 500. Comparatively, Chimera Investment Corporation has a beta of 0.86, indicating that its share price is 14% less volatile than the S&P 500.
Capstead Mortgage Corporation pays an annual dividend of $0.76 per share and has a dividend yield of 8.7%. Chimera Investment Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 11.2%. Capstead Mortgage Corporation pays out 124.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chimera Investment Corporation pays out 61.3% of its earnings in the form of a dividend. Capstead Mortgage Corporation has increased its dividend for 3 consecutive years and Chimera Investment Corporation has increased its dividend for 2 consecutive years. Chimera Investment Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares Capstead Mortgage Corporation and Chimera Investment Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Capstead Mortgage Corporation||34.00%||7.16%||0.54%|
|Chimera Investment Corporation||58.21%||13.29%||2.33%|
This is a breakdown of current ratings and price targets for Capstead Mortgage Corporation and Chimera Investment Corporation, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Capstead Mortgage Corporation||0||2||0||0||2.00|
|Chimera Investment Corporation||0||4||0||0||2.00|
Capstead Mortgage Corporation currently has a consensus price target of $11.00, suggesting a potential upside of 25.86%. Chimera Investment Corporation has a consensus price target of $18.83, suggesting a potential upside of 5.39%. Given Capstead Mortgage Corporation’s higher probable upside, research analysts clearly believe Capstead Mortgage Corporation is more favorable than Chimera Investment Corporation.
Earnings & Valuation
This table compares Capstead Mortgage Corporation and Chimera Investment Corporation’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Capstead Mortgage Corporation||$213.33 million||3.94||$82.87 million||$0.61||14.33|
|Chimera Investment Corporation||$934.07 million||3.59||$551.94 million||$3.26||5.48|
Chimera Investment Corporation has higher revenue and earnings than Capstead Mortgage Corporation. Chimera Investment Corporation is trading at a lower price-to-earnings ratio than Capstead Mortgage Corporation, indicating that it is currently the more affordable of the two stocks.
Chimera Investment Corporation beats Capstead Mortgage Corporation on 9 of the 15 factors compared between the two stocks.
About Capstead Mortgage Corporation
Capstead Mortgage Corporation operates as a self-managed real estate investment trust (REIT). The Company manages a leveraged portfolio of residential mortgage pass-through securities consisting of relatively short-duration adjustable-rate mortgage (ARM) securities issued and guaranteed by government-sponsored enterprises, either Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac), or by an agency of the federal government, the Government National Mortgage Association (Ginnie Mae). The Company finances its residential mortgage investments by leveraging its long-term investment capital with secured borrowings consisting primarily of borrowings under repurchase arrangements with commercial banks and other financial institutions. The Company’s portfolio of residential mortgage investments includes residential mortgage investments.
About Chimera Investment Corporation
Chimera Investment Corporation is a real estate investment trust (REIT). The company is engaged in the business of investing in a portfolio of mortgage assets, including agency residential mortgage-backed security (RMBS), non-agency RMBS, agency commercial mortgage-backed securities (CMBS), residential mortgage loans and real estate related securities. The Company’s objective is to provide risk-adjusted returns to its investors over the long-term, primarily through dividends and secondarily through capital appreciation. The Company focuses to achieve this objective by investing in an investment portfolio of RMBS, agency CMBS, residential mortgage loans, commercial mortgage loans, real estate-related securities and various other asset classes. The MBS and real estate-related securities the Company purchases include investment-grade and non-investment grade classes, including the BB-rated, B-rated and non-rated classes. It also invests in investment grade and non-investment grade RMBS.
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