13% Dividend Yield and 12% Upside
Despite big yields, these shares are still cheap.
Fat dividends that grow with short-term rates are a nice hedge.
The yields are between 9% and 9.5% today, but they are due for a big dividend increase starting in March 2024. Bigger dividends should increase valuation.
The big risk factor would be home prices or the economy plunging. Not just a dip.
I’ve built significant positions in these shares to take advantage of the upcoming dividend increase.
The article focuses on CIM-B and CIM-D. These are two shares we’ve purchased frequently over the last 3 months.
We’re looking at the expected dividend yield when the floating rate kicks in (starts 3/30/2024) and the upside to call value. I’m not predicting a call, but I do think the dividend increase (or anticipation of it) should drive shares much closer to $25.00. There’s a pretty good chance prices are at least over $24.00 after the shares are floating, so long as we aren’t in a rough recession and short-term rates are relatively unchanged.
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