9%+ Yields For Bigger Income

Core Insights - The article discusses the recent performance and investment potential of Chimera Investment Corporation's baby bond (CIMN), highlighting its yield to maturity and market conditions [2][5][10]. Group 1: Investment Overview - CIMN has a yield to maturity of 9.95% and is currently priced at $24.50, with an annual dividend rate of $2.25 [4][5]. - The bond has a next callable date of May 15, 2026, with a yield to call of 10.7% [4][5]. - The liquidity of CIMN has been described as weak, which may affect the ability to initiate large positions [5]. Group 2: Comparison with Preferred Shares - CIM-D, a preferred share of Chimera, is trading at $24.85 with a floating yield of approximately 11.37% [6]. - The spread between CIM-D and CIMN is only about 1.4%, leading to a preference for CIMN due to its lower risk and reasonable valuation [6][8]. - The article suggests that the potential for interest rate cuts in the coming year may favor the baby bond over the preferred shares [6][8]. Group 3: Market Dynamics - CIMN's price has recently increased to $25.24, resulting in a decline in its yield to maturity to about 9.21% [13]. - The article notes that the preferred shares may experience price adjustments around their ex-dividend dates, which could impact trading strategies [7][10]. - The author is considering swapping positions between CIM-D and CIMN based on valuation and yield dynamics [10].