Dividends4Life: This 7.7%-Yielding Preferred Stock Is Worth A Shot

This Series B preferred stock is a compelling alternative to the mortgage REIT's common shares, especially for investors with an average risk tolerance. The Series B combines fixed with floating rate dividend payments. The Series B preferred stock offers income investors a good mix of principal protection and high, recurring dividend income. Investors pay a ~4 percent premium to the liquidation preference value. An investment in this Series B preferred stock yields 7.7 percent.

Chimera Investment Corp. (CIM) is a high-yielding mortgage REIT that has issued both common and preferred shares. The mortgage REIT's common shares currently offer investors a 10.6 percent yield, but shares have proven to be volatile, thus reflect a high degree of risk. Chimera Investment Corp.'s preferred stock layer, on the other hand, allows investors to dial down investment risk while still capturing attractive dividend income. An investment in Chimera Investment Corp.'s preferred stock - which I discuss in this article - comes with a dividend yield of 7.7 percent.

Source: Seeking Alpha

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