Old Republic International Corporation (NYSE:ORI) is about to trade ex-dividend in the next 3 days. This means that investors who purchase shares on or after the 5th of September will not receive the dividend, which will be paid on the 16th of September.
Old Republic International's next dividend payment will be US$1.20 per share, which looks like a nice increase on last year, when the company distributed a total of US$0.80 to shareholders. If you buy this business for its dividend, you should have an idea of whether Old Republic International's dividend is reliable and sustainable. As a result, readers should always check whether Old Republic International has been able to grow its dividends, or if the dividend might be cut.
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fortunately Old Republic International's payout ratio is modest, at just 32% of profit.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at Old Republic International, with earnings per share up 7.5% on average over the last five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Old Republic International has increased its dividend at approximately 1.6% a year on average.
To Sum It Up
From a dividend perspective, should investors buy or avoid Old Republic International? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. Overall, Old Republic International looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Curious what other investors think of Old Republic International? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow .
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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