CDS vs CMO Which Is More Profitable?

Collateralized debt securities (CDS) and Collateralized Mortgage Obligations (CMO) are two types of financial securities that are often compared in the investment world. CDS are derivative instruments that provide insurance against default on bonds or other debt obligations, while CMO are mortgage-backed securities that pool together mortgage loans to create new investment products. Both CDS and CMO stocks carry unique risk and return profiles, making them popular choices for investors looking to diversify their portfolios and hedge against specific risks in the market.

CDS or CMO?

When comparing CDS and CMO, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between CDS and CMO.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. CDS has a dividend yield of 3.7%, while CMO has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. CDS reports a 5-year dividend growth of 8.45% year and a payout ratio of 0.00%. On the other hand, CMO reports a 5-year dividend growth of 0.00% year and a payout ratio of -19.66%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with CDS P/E ratio at 13.56 and CMO's P/E ratio at -11.17. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. CDS P/B ratio is 1.47 while CMO's P/B ratio is 1.06.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, CDS has seen a 5-year revenue growth of 0.06%, while CMO's is -0.38%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with CDS's ROE at 11.08% and CMO's ROE at -9.66%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are ¥1833.00 for CDS and ฿0.80 for CMO. Over the past year, CDS's prices ranged from ¥1651.00 to ¥1931.00, with a yearly change of 16.96%. CMO's prices fluctuated between ฿0.59 and ฿1.37, with a yearly change of 132.20%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.