Comparing Chimera Investment (CIM) & New Residential Investment (NRZ)
Chimera Investment (NYSE: CIM) and New Residential Investment (NYSE:NRZ) are both mid-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, earnings, valuation, institutional ownership, risk, profitability and analyst recommendations.
Chimera Investment pays an annual dividend of $2.00 per share and has a dividend yield of 11.4%. New Residential Investment pays an annual dividend of $2.00 per share and has a dividend yield of 11.4%. Chimera Investment pays out 61.3% of its earnings in the form of a dividend. New Residential Investment pays out 64.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Chimera Investment has increased its dividend for 3 consecutive years and New Residential Investment has increased its dividend for 4 consecutive years. Chimera Investment is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares Chimera Investment and New Residential Investment’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Chimera Investment||$934.07 million||3.51||$551.94 million||$3.26||5.36|
|New Residential Investment||$1.08 billion||5.48||$504.45 million||$3.09||5.68|
Chimera Investment has higher earnings, but lower revenue than New Residential Investment. Chimera Investment is trading at a lower price-to-earnings ratio than New Residential Investment, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Chimera Investment has a beta of 0.84, indicating that its share price is 16% less volatile than the S&P 500. Comparatively, New Residential Investment has a beta of 1.02, indicating that its share price is 2% more volatile than the S&P 500.
This is a breakdown of current ratings and recommmendations for Chimera Investment and New Residential Investment, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|New Residential Investment||0||0||7||0||3.00|
Chimera Investment presently has a consensus price target of $18.88, suggesting a potential upside of 7.98%. New Residential Investment has a consensus price target of $18.92, suggesting a potential upside of 7.85%. Given Chimera Investment’s higher possible upside, equities research analysts clearly believe Chimera Investment is more favorable than New Residential Investment.
This table compares Chimera Investment and New Residential Investment’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|New Residential Investment||60.06%||19.38%||3.99%|
Insider and Institutional Ownership
50.3% of Chimera Investment shares are held by institutional investors. Comparatively, 45.1% of New Residential Investment shares are held by institutional investors. 0.7% of Chimera Investment shares are held by company insiders. Comparatively, 0.5% of New Residential Investment shares are held by company 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.
New Residential Investment beats Chimera Investment on 9 of the 17 factors compared between the two stocks.
Chimera Investment Company Profile
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.
New Residential Investment Company Profile
New Residential Investment Corp. is a real estate investment trust (REIT). The Company focuses on investing in, and managing, investments related to residential real estate. The Company’s segments include investments in excess mortgage servicing rights (Excess MSRs); investments in mortgage servicing rights (MSRs); investments in servicer advances; investments in real estate securities; investments in residential mortgage loans; investments in consumer loans, and corporate. Its portfolio includes mortgage servicing related assets, residential mortgage backed securities (RMBS), residential mortgage loans and other investments. The Company’s servicing related assets include its investments in Excess MSRs, MSRs and servicer advances. The Company invests in agency RMBS and non-agency RMBS. The Company’s other investments consist of consumer loans.
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