A portfolio of stocks I've been building since September 3 I named Volio Folio. It will eventually hold 52 dividend dogs. Volio is the fifth portfolio I've built (at a one dividend dog per-week pace) since 2014. Five portfolios = V for Volio!
Today I'm reviewing the fourth of five real estate stocks striving to be picked to join the Volio folio. This could be the tenth pick for Volio!
That real estate sector includes nine industries all related to real property ownership. Like: general real estate; Real Estate Services; and seven varieties of real estate investment trusts, or REITs.
My subject today is a small cap residential real estate investment trust, Cherry Hill Mortgage Investment Corp. Their trading ticker symbol is CHMI. This is my first report on Cherry Hill Mortgage Investment Corp (CHMI).
Cherry Hill Mortgage Investment Corp operates in the real estate sector in the United States. It invests in residential mortgage assets with the objective of generating current yields and risk-adjusted total returns for its stockholders over the long term.
The company reportable segments include investments in residential mortgage-backed securities (RMBS), investments in Servicing Related Assets and All Other. It generates maximum revenue from the RMBS segment in the form of Interest income earned for servicing mortgage loans.
The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. Cherry Hill Mortgage Investment Corporation was founded in 2012 and is based in Farmingdale, New Jersey.
I use three key data points to gauge dividend-paying equities or funds like Cherry Hill Mortgage Investment Corp:
(1) Price
(2) Dividends
(3) Returns
Besides those three, several other keys will finally unlock an equity or fund in which to invest, or not.
Those three basic keys, however, best tell whether a company has made, is making, and will make money.
CHMI Price
Cherry Hill's price per share closed at $13.54 yesterday. A year ago its price was $17.99. In the past year, its price fell $4.45 or nearly 24.7%.
Assuming Cherry Hill's stock trades in a range of $12.00 to $16.00 this next year, it's recent $13.54. price could rise by $1.46 and maybe get to $15.00 by early-November, 2020, assuming this past month's upward price momentum continues.
CHMI Dividends
Cherry Hill's latest declared quarterly dividend was $0.40, paid October 29th.
That $0.40 Q dividend was cut from $0.49 last month and equates to $1.60 annually and yields 11.82% based on yesterday's $13.54 closing price.
CHMI Gains?
Adding the $1.60 annual estimated dividend to my $1.46 estimate of Cherry Hill's price upside shows a $3.06 potential gross gain, per share, which will be reduced by any costs to trade these shares.
Say we put a little over $1,000.00 today into Cherry Hill Mortgage Investment Corp at its recent $13.54 price, we'd buy 74 shares of CHMI.
A $10 broker fee paid half at purchase and half at sale could cost us $0.14 per share.
Subtract that $0.14 brokerage cost from the estimated $3.06 gross estimated gain leaves a net gain of $2.92 X 74 shares = $216.08 or a 21.6% net gain on a $1,001.96 investment.
Therefore, Cherry Hill Mortgage Investment Corp, whose trading ticker symbol is CHMI shows a possible 21.6% net gain including an 11.82% dividend yield. It could be more, it could be less.
The above speculation is based on past year performance. The actual results remain to be seen to learn if Cherry Hill Mortgage Investment Corp is worth your time and money.
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