Annaly Capital Management (NYSE:NLY – Get Free Report) and Chimera Investment (NYSE:CIM – Get Free Report) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, valuation, dividends and analyst recommendations.
Institutional and Insider Ownership
51.6% of Annaly Capital Management shares are owned by institutional investors. Comparatively, 48.4% of Chimera Investment shares are owned by institutional investors. 0.2% of Annaly Capital Management shares are owned by insiders. Comparatively, 1.8% of Chimera Investment shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Dividends
Annaly Capital Management pays an annual dividend of $3.00 per share and has a dividend yield of 16.4%. Chimera Investment pays an annual dividend of $1.80 per share and has a dividend yield of 21.7%. Annaly Capital Management pays out 209.8% 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 pays out -176.5% of its earnings in the form of a dividend. Annaly Capital Management has raised its dividend for 2 consecutive years and Chimera Investment has raised its dividend for 1 consecutive years. Chimera Investment is clearly the better dividend stock, given its higher yield and lower payout ratio.
Valuation & Earnings
This table compares Annaly Capital Management and Chimera Investment”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Annaly Capital Management | $5.96 billion | 2.31 | $2.03 billion | $1.43 | 12.77 |
| Chimera Investment | $821.34 million | 0.85 | $230.50 million | ($1.02) | -8.13 |
Annaly Capital Management has higher revenue and earnings than Chimera Investment. Chimera Investment is trading at a lower price-to-earnings ratio than Annaly Capital Management, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Annaly Capital Management has a beta of 1.21, suggesting that its stock price is 21% more volatile than the S&P 500. Comparatively, Chimera Investment has a beta of 1.72, suggesting that its stock price is 72% more volatile than the S&P 500.
Analyst Recommendations
This is a summary of current recommendations for Annaly Capital Management and Chimera Investment, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Annaly Capital Management | 0 | 4 | 7 | 1 | 2.75 |
| Chimera Investment | 1 | 2 | 1 | 0 | 2.00 |
Annaly Capital Management presently has a consensus price target of $21.67, indicating a potential upside of 18.62%. Chimera Investment has a consensus price target of $14.50, indicating a potential upside of 74.80%. Given Chimera Investment’s higher possible upside, analysts plainly believe Chimera Investment is more favorable than Annaly Capital Management.
Profitability
This table compares Annaly Capital Management and Chimera Investment’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Annaly Capital Management | 15.52% | 16.65% | 1.72% |
| Chimera Investment | 0.14% | 9.82% | 1.56% |
Summary
Annaly Capital Management beats Chimera Investment on 13 of the 18 factors compared between the two stocks.
About Annaly Capital Management
Annaly Capital Management, Inc., a diversified capital manager, engages in mortgage finance. The company invests in agency mortgage-backed securities collateralized by residential mortgages; non-agency residential whole loans and securitized products within the residential and commercial markets; mortgage servicing rights; agency commercial mortgage-backed securities; to-be-announced forward contracts; residential mortgage loans; and agency or private label credit risk transfer securities. It has elected to be taxed as a real estate investment trust (REIT). As a REIT, it is not subject to federal income tax to the extent that it distributes its taxable income to its shareholders. The company was incorporated in 1996 and is based in New York, New York.
About Chimera Investment
Chimera Investment Corporation operates as a real estate investment trust (REIT) in the United States. The company, through its subsidiaries, invests in a portfolio of mortgage assets, including residential mortgage loans, agency residential mortgage-backed securities, non-agency residential mortgage-backed securities, agency mortgage-backed securities secured by pools of commercial mortgage loans, business purpose and investor loans, and other real estate related securities. It invests in investment grade, non-investment grade, and non-rated classes. The company qualifies as a real estate investment trust (REIT) for federal income tax purposes. As a REIT, it intends to distribute at least 90% of its taxable income as dividends to shareholders. Chimera Investment Corporation was incorporated in 2007 and is headquartered in New York, New York.
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