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Old Republic International Corporation Message Board

  • harold33272 harold33272 Jul 30, 2013 5:00 PM Flag

    Something to consider about Old Republic's dividend ...

    With a turnaround in the company clearly in the works here, isn't it reasonable to expect that in 2014 Old Republic will at least provide a more modest dividend increase? Even a $0.01 increase per quarter ($0.76 per year) would be a 5.5% dividend increase.

    So I ask some of the longtime stockholders here, isn't this a reasonable expectation or am I being too optimistic?


    Sentiment: Buy

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    • foldad Aug 24, 2013 11:36 PM Flag

      When is the x-div date or is it too late?

    • I'm just guessing on the 2014 dividend. I think people who buy ORI for the dividend and intend to hold it long term will be very glad they did, whether the faster dividend growth starts in 2014, or 2015 and beyond..

      This is just me reading between the lines and referring back to some prior conference calls. IMO I think ORI wants to avoid its mortgage insurance division filing bk. The N.C. regulatory agency can force that. I believe - again just my interpretation - that ORI feels that it will be the wrong message to send to the regulatory agency if they raise their dividend aggressively as long as they aren't paying 100% on the dollar on the mortgage insurance claims as they are filed. Currently ORI is only paying 60% and accruing the rest on the books.

      ORI has a loan on the books that has a covenant that if any of their subsidiaries files for bankruptcy, the whole loan comes due immediately. Al Zucaro (ORI CEO) took a lot of flak from the investment community on conference calls last year because he said he wasn't particularly worried about that happening, but if it did, ORI would refinance elsewhere. He was 100% correct, imo, that it was a non--issue. But Wall Street didn't like his answer.

      So that is another reason that the company wants to avoid bk. It muddies the water and requires action by the company. It won't hurt ORI financially - the mortgage insurance division is a separate entity. But it would be a PR nightmare and affect the stock price short term. Also in a conference call last year, Al said they wanted to add another $100 million in liquidity on their books. I am guessing that behind closed doors, Al said "never again" would he be caught short on cash.

      So because of all that I suspect they will go slow on dividend increases. At least until they are paying 100% on mortgage insurance claims as they are filed. But no matter what, I think the dividend is secure and will rise every year, "forever."

      Sentiment: Strong Buy

      • 1 Reply to ori.investor
      • ori.investor thanks a lot. I've just taken a position in Old Republic this month and I did so largely because of the dividend history, the company's turnaround and current valuation.

        Really appreciate your insight and detailed perspective here.

        As long as the dividend remains safe, as long as it continues to rise from these levels and as long as it remains a big priority for management, then that's more than reasonable.

        Sentiment: Buy

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