Head to Head Contrast: KKR Real Estate Finance Trust (KREF) vs. Chimera Investment (CIM)

KKR Real Estate Finance Trust (NYSE: KREF) and Chimera Investment (NYSE:CIM) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, profitability, dividends, risk, valuation, earnings and institutional ownership.

Profitability

This table compares KKR Real Estate Finance Trust and Chimera Investment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
KKR Real Estate Finance Trust 77.41% 6.08% 0.75%
Chimera Investment 58.21% 13.29% 2.33%

Dividends

KKR Real Estate Finance Trust pays an annual dividend of $1.48 per share and has a dividend yield of 7.5%. Chimera Investment pays an annual dividend of $2.00 per share and has a dividend yield of 11.2%. Chimera Investment pays out 61.5% of its earnings in the form of a dividend. Chimera Investment has increased its dividend for 3 consecutive years. Chimera Investment is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares KKR Real Estate Finance Trust 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
KKR Real Estate Finance Trust $41.19 million 25.81 $31.15 million N/A N/A
Chimera Investment $934.07 million 3.60 $551.94 million $3.25 5.52

Chimera Investment has higher revenue and earnings than KKR Real Estate Finance Trust.

Insider and Institutional Ownership

65.7% of KKR Real Estate Finance Trust shares are held by institutional investors. Comparatively, 50.7% of Chimera Investment shares are held by institutional investors. 0.7% of Chimera Investment shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations and price targets for KKR Real Estate Finance Trust and Chimera Investment, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
KKR Real Estate Finance Trust 0 3 0 0 2.00
Chimera Investment 0 4 0 0 2.00

KKR Real Estate Finance Trust presently has a consensus target price of $22.50, suggesting a potential upside of 13.64%. Chimera Investment has a consensus target price of $18.83, suggesting a potential upside of 5.04%. Given KKR Real Estate Finance Trust’s higher probable upside, analysts clearly believe KKR Real Estate Finance Trust is more favorable than Chimera Investment.

Summary

Chimera Investment beats KKR Real Estate Finance Trust on 7 of the 12 factors compared between the two stocks.

About KKR Real Estate Finance Trust

KKR Real Estate Finance Trust Inc is a real estate finance company that focuses primarily on originating and acquiring senior mortgage loans secured by commercial real estate assets (CRE). KKR manages investments across multiple asset classes, including private equity, real estate, energy, infrastructure, credit and hedge funds. The Company’s investment strategy is to originate or acquire senior mortgage loans collateralized by institutional-quality CRE assets. Its target assets also include mezzanine loans, preferred equity and other debt-oriented instruments. The Company’s investment objective is capital preservation and generating attractive risk-adjusted returns for its stockholders over the long term, primarily through dividends.

About Chimera Investment

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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