Five Oaks Investment Corp. (NYSE: OAKS) and Chimera Investment Corporation (NYSE:CIM) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, risk, dividends, earnings, analyst recommendations, institutional ownership and profitability.

Dividends

Five Oaks Investment Corp. pays an annual dividend of $0.60 per share and has a dividend yield of 14.3%. Chimera Investment Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 10.5%. Five Oaks Investment Corp. pays out 89.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chimera Investment Corporation pays out 57.3% of its earnings in the form of a dividend. Five Oaks Investment Corp. has increased its dividend for 2 consecutive years. Five Oaks Investment Corp. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Five Oaks Investment Corp. and Chimera Investment Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Five Oaks Investment Corp. 12.65% 10.48% 0.48%
Chimera Investment Corporation 63.94% 14.27% 2.52%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Five Oaks Investment Corp. and Chimera Investment Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Five Oaks Investment Corp. 0 1 0 0 2.00
Chimera Investment Corporation 0 3 0 0 2.00

Chimera Investment Corporation has a consensus price target of $18.50, suggesting a potential downside of 3.09%. Given Chimera Investment Corporation’s higher probable upside, analysts clearly believe Chimera Investment Corporation is more favorable than Five Oaks Investment Corp..

Earnings & Valuation

This table compares Five Oaks Investment Corp. and Chimera Investment Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Five Oaks Investment Corp. $26.49 million 3.52 $14.83 million $0.67 6.28
Chimera Investment Corporation $933.35 million 3.84 $655.36 million $3.49 5.47

Chimera Investment Corporation has higher revenue and earnings than Five Oaks Investment Corp.. Chimera Investment Corporation is trading at a lower price-to-earnings ratio than Five Oaks Investment Corp., indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

33.7% of Five Oaks Investment Corp. shares are owned by institutional investors. Comparatively, 52.2% of Chimera Investment Corporation shares are owned by institutional investors. 0.9% of Five Oaks Investment Corp. shares are owned by insiders. Comparatively, 0.7% of Chimera Investment Corporation shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Five Oaks Investment Corp. has a beta of 1.32, meaning that its stock price is 32% more volatile than the S&P 500. Comparatively, Chimera Investment Corporation has a beta of 0.9, meaning that its stock price is 10% less volatile than the S&P 500.

Summary

Chimera Investment Corporation beats Five Oaks Investment Corp. on 10 of the 15 factors compared between the two stocks.

About Five Oaks Investment Corp.

Five Oaks Investment Corp. is a real estate investment trust. The Company is focused on investing on a leveraged basis in mortgage and other real estate-related assets, particularly residential mortgage loans and mortgage-backed securities (MBS). The Company invests in various assets, such as Agency residential MBS (RMBS); securitizations backed by multi-family mortgage loans, or Multi-Family MBS; residential mortgage loans and other mortgage-related investments, including mortgage servicing rights (MSRs), and Non-Agency RMBS. The Company finances its investments in Agency RMBS, Multi-Family MBS, residential mortgage loans and Non-Agency RMBS primarily through short-term borrowings structured as repurchase agreements. The Company is externally managed and advised by Oak Circle Capital Partners LLC.

About Chimera Investment Corporation

Chimera Investment Corporation is a real estate investment trust (REIT). The company is engaged in the business of investing in a portfolio of mortgage assets, including agency residential mortgage-backed security (RMBS), non-agency RMBS, agency commercial mortgage-backed securities (CMBS), residential mortgage loans and real estate related securities. The Company’s objective is to provide risk-adjusted returns to its investors over the long-term, primarily through dividends and secondarily through capital appreciation. The Company focuses to achieve this objective by investing in an investment portfolio of RMBS, agency CMBS, residential mortgage loans, commercial mortgage loans, real estate-related securities and various other asset classes. The MBS and real estate-related securities the Company purchases include investment-grade and non-investment grade classes, including the BB-rated, B-rated and non-rated classes. It also invests in investment grade and non-investment grade RMBS.

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