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Old Republic International (ORI) Could Be a Great Choice

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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Old Republic International in Focus

Headquartered in Chicago, Old Republic International (ORI - Free Report) is a Finance stock that has seen a price change of 17.28% so far this year. The insurance underwriter is currently shelling out a dividend of $0.26 per share, with a dividend yield of 3.07%. This compares to the Insurance - Multi line industry's yield of 1.97% and the S&P 500's yield of 1.58%.

In terms of dividend growth, the company's current annualized dividend of $1.06 is up 8.2% from last year. Over the last 5 years, Old Republic International has increased its dividend 5 times on a year-over-year basis for an average annual increase of 5.64%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Old Republic's current payout ratio is 37%. This means it paid out 37% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, ORI expects solid earnings growth. The Zacks Consensus Estimate for 2024 is $2.83 per share, with earnings expected to increase 7.60% from the year ago period.

Bottom Line

From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, ORI presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).


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