Wednesday, May 4, 2011

SELLING BTI, BUYING CHIMERA

I decided to sell my stake in British American Tobacco and take the profit of 34.75%.  While I believe BTI would make a good long term holding, I also own shares of PM and MO and decided to reduce my investment in the tobacco industry. 

I'm taking the money from the sale of BTI and reinvesting it in a Chimera Investment Corp. (CIM:NYSE).  CIM is a REIT with a dividend yield of 13.83% on their recent price of $4.05.  While I am aware of the risks of investing in REIT's in a market with increasing interest rates, I'm primarily seeking extra income from the higher yield on dividends (dividend income from CIM is more than twice the yield of BTI).  With CIM being much lower in price and having great financials, I'm also looking for some upside potential here.  If I do make a decent gain on share price, I would most likely pull out my initial investment and keep the remaining shares as one of my "free stocks" for the dividend payout.  Otherwise, I'll draw the dividends, monitor it closely for any ill effects from interest rates and if the price should start to decline, I'll move the money elsewhere. 

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