Old Republic International Corp's Dividend Analysis
Assessing the Sustainability and Growth of ORI's Dividend
Old Republic International Corp(NYSE:ORI) recently announced a dividend of $0.25 per share, payable on 2023-12-15, with the ex-dividend date set for 2023-12-04. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Old Republic International Corp's dividend performance and assess its sustainability.
What Does Old Republic International Corp Do?
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Old Republic International Corp offers a diverse range of specialized insurance products to individuals and institutions. It operates in three segments: General Insurance (property and liability insurance), Title Insurance, and Republic Financial Indemnity Group (RFIG) Run-off. General Insurance includes products such as Automobile Extended Warranty Insurance, Aviation, Commercial Automobile Insurance, Inland Marine, Travel Accident, Workers' Compensation, Financial Indemnity, and others. Title Insurance's business consists primarily of the issuance of policies to real estate purchasers and investors based upon searches of the public records which contain information concerning interests in real property. Almost all of its revenue is generated from the United States.
A Glimpse at Old Republic International Corp's Dividend History
Old Republic International Corp has maintained a consistent dividend payment record since 1982. Dividends are currently distributed on a quarterly basis. Old Republic International Corp has increased its dividend each year since 1982. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 41 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Old Republic International Corp's Dividend Yield and Growth
As of today, Old Republic International Corp currently has a 12-month trailing dividend yield of 3.28% and a 12-month forward dividend yield of 3.33%. This suggests an expectation of increased dividend payments over the next 12 months.
Old Republic International Corp's dividend yield of 3.28% is near a 10-year low and underperforms than 51.67% of global competitors in the Insurance industry, suggesting that the company's dividend yield may not be a compelling proposition for income investors.
Over the past three years, Old Republic International Corp's annual dividend growth rate was 4.80%. Extended to a five-year horizon, this rate decreased to 4.00% per year. And over the past decade, Old Republic International Corp's annual dividends per share growth rate stands at 2.50%.
Based on Old Republic International Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Old Republic International Corp stock as of today is approximately 3.99%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Old Republic International Corp's dividend payout ratio is 0.31.
Old Republic International Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Old Republic International Corp's profitability 7 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Old Republic International Corp's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Old Republic International Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Old Republic International Corp's revenue has increased by approximately 2.50% per year on average, a rate that underperforms than approximately 59.2% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Old Republic International Corp's earnings increased by approximately -13.60% per year on average, a rate that underperforms than approximately 75.13% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 18.40%, which underperforms than approximately 17.53% of global competitors.
Conclusion: The Dividend Prospect of Old Republic International Corp
Old Republic International Corp's commitment to consistent dividend growth stands out as a testament to its financial discipline and shareholder-friendly approach. The company's dividend history, marked by its status as a dividend aristocrat, provides a layer of assurance to investors seeking steady income streams. However, the current yield's position near a 10-year low and its comparison to industry peers suggest that yield seekers might need to weigh other factors in their investment decision.
The sustainability of Old Republic International Corp's dividends appears sound, given its reasonable payout ratio and strong profitability rank. Yet, the company's growth metrics present a mixed picture, with solid revenue growth but lagging earnings and EBITDA growth compared to industry competitors. This indicates potential areas for improvement that could strengthen the company's ability to maintain and increase dividends in the future.
For value investors, Old Republic International Corp represents a balance between a proven history of dividend reliability and areas for growth that could bolster future performance. As always, it is critical for investors to consider their investment goals and conduct thorough research before making decisions. For those interested in exploring high-dividend yield opportunities, GuruFocus Premium users can utilize the High Dividend Yield Screener to discover stocks that align with their investment criteria.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
