I have had $CYS for a few weeks now; I picked up half a position when it was low $14s and was scared to add on the dip when it was around $13.80s but now I regret not picking it up. I really like their dividends; it’s $2.00 a year or yields 14%. It has been good to me so far and am looking to add when it drops.
Here is the sketchy part, this company keeps selling more shares below par to raise capital and they use that capital to invest into RMBS (residential mortgage backed security) usually. So far, this company is doing well with debt and has paid me a descent amount. I don’t recommend this to be in a typical portfolio because you’ll probably get taxed up the ass; so instead, put this guy in an IRA or a ROTH account.
Here is their investment strategy taken from their site:
Our objective is to provide consistent returns to our investors through a combination of dividends and capital appreciation.
We invest in residential mortgage backed securities either issued or guaranteed as to principal and interest by a government agency or a government-sponsored entity, or Agency RMBS, collateralized by either adjustable-rate mortgage loans, or ARMs, with interest rates that reset monthly, hybrid ARMs that typically have a coupon rate that is fixed for an initial period (typically three, five seven or ten years) and thereafter resets at regular intervals, or fixed rate mortgage loans.
Our investment strategy is designed to:
- build an investment portfolio consisting of Agency RMBS that seeks to generate attractive risk-adjusted investment income;
- manage financing, interest and prepayment rate risks;
- capitalize on discrepancies in the relative valuations in the RMBS market;
- manage cash flow so as to provide for regular quarterly distributions to stockholders;
- limit credit risk;
- minimize the impact that changing interest rates have on our net investment income;
- cause us to maintain our qualification as a real estate investment trust, or;
- cause us to remain exempt from the registration requirements of the Investment Company Act of 1940, or the Investment Company Act.
Our income is generated primarily from the net spread, or difference, between the interest income we earn on our investment portfolio and the cost of our borrowings and hedging activities. We believe that the best approach to generating a positive net spread is to manage our liabilities to mirror, as often as possible, the interest rate risks of our investments. To seek to achieve this result, we employ short-term financing in combination with hedging techniques.
So the only time this stock really dips is when they give out dividends or when they sell more shares to raise capital; that’s when I added last time.
I’ve also invested in $GGP, $HHC but their dividends suck and stock price fluctuates way too much with the market. $CYS keeps pushing forward even though the market is down; fuck Newton’s Universal Law of Gravity!
