NYSE:ORI) is about to trade ex-dividend in the next 4 days. This means that investors who purchase shares on or after the 3rd of September will not receive the dividend, which will be paid on the 15th of September.” data-reactid=”28″ type=”text”>Regular readers will know that we love our dividends at Simply Wall St, which is why it’s exciting to see Old Republic International Corporation (NYSE:ORI) is about to trade ex-dividend in the next 4 days. This means that investors who purchase shares on or after the 3rd of September will not receive the dividend, which will be paid on the 15th of September.
Old Republic International’s next dividend payment will be US$0.21 per share, and in the last 12 months, the company paid a total of US$0.84 per share. Looking at the last 12 months of distributions, Old Republic International has a trailing yield of approximately 5.1% on its current stock price of $16.49. We love seeing companies pay a dividend, but it’s also important to be sure that laying the golden eggs isn’t going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are growing.
Check out our latest analysis for Old Republic International ” data-reactid=”30″ type=”text”> Check out our latest analysis for Old Republic International
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Last year Old Republic International paid out 90% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings.
When a company pays out a dividend that is not well covered by profits, the dividend is generally seen as more vulnerable to being cut.
here to see the company’s payout ratio, plus analyst estimates of its future dividends.” data-reactid=”37″ type=”text”>Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Old Republic International’s earnings per share have fallen at approximately 11% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Old Republic International has lifted its dividend by approximately 2.1% a year on average. That’s intriguing, but the combination of growing dividends despite declining earnings can typically only be achieved by paying out a larger percentage of profits. Old Republic International is already paying out 90% of its profits, and with shrinking earnings we think it’s unlikely that this dividend will grow quickly in the future.
To Sum It Up
Is Old Republic International an attractive dividend stock, or better left on the shelf? Earnings per share are in decline and Old Republic International is paying out what we feel is an uncomfortably high percentage of its profit as dividends. It’s not that we hate the business, but we feel that these characeristics are not desirable for investors seeking a reliable dividend stock to own for the long term. All things considered, we’re not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.
2 warning signs for Old Republic International and you should be aware of them before buying any shares.” data-reactid=”55″ type=”text”>Having said that, if you’re looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with Old Republic International. Our analysis shows 2 warning signs for Old Republic International and you should be aware of them before buying any shares.
checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.” data-reactid=”60″ type=”text”>If you’re in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.