10% Dividend Yields From Chimera Preferred Shares Offer Trading Opportunities

Chimera Investment Corporation preferred shares present recurring opportunities through disciplined relative value trading rather than passive buy-and-hold strategies. CIM-B (CIM.PR.B) is currently rated a buy, while CIM-D (CIM.PR.D) and CIM-C (CIM.PR.C) are holds, pending more attractive entry points.

Active monitoring and timely swaps between similar preferreds have consistently delivered outperformance, capitalizing on valuation gaps rather than fundamental changes. Relative value analysis, not emotional attachment, drives position sizing and harvesting gains as market pricing fluctuates across CIM’s preferred shares.

Chimera Investment Corporation ( CIM ) has three preferred shares we will be discussing. Instead of buying one preferred share and holding it indefinitely, we monitor relative valuations to identify opportunities to swap between preferred shares. We will be going over current valuations and then our trade history for a good example of how we implement that strategy in practice.

Preferred Shares CIM-B ( CIM.PR.B ) is currently in the buy range and CIM-D ( CIM.PR.D ) is currently in our hold range. CIM-C ( CIM.PR.C ) is in our hold range and would only need to fall below $22.67 to be in our buy range.

One of the biggest advantages of investing in preferred shares is that investors don't need to take on the risks from the common stock to get an attractive yield. Sometimes the best opportunities come from recognizing when a preferred share is trading at an attractive valuation. For a long time now, Chimera's preferred shares have provided an excellent opportunity and example of how we use relative valuations to trade in and out of positions. The chart below highlights those trades.