Some investors rely on dividends to grow their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that International Society of the Former Republic (NYSE: ORI) is set to be ex-dividend in just 3 days. The ex-dividend date is one business day before a company’s registration date, which is the date the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important because any share transaction must have been settled before the registration date to be eligible for a dividend. In other words, investors can buy Old Republic International shares before September 14 so they can claim the dividend that will be paid on October 6.
The company’s next dividend payment will be US $ 1.50 per share, compared to last year when the company paid a total of US $ 2.38 to shareholders. Calculating the value of last year’s payouts shows Old Republic International has a 9.4% return on the current share price of $ 25.36. Dividends are a major contributor to returns on investment for long-term holders, but only if the dividend continues to be paid. That is why we should always check whether dividend payments seem sustainable and whether the business is growing.
Check out our latest review for Old Republic International
If a company pays more dividends than it has earned, then the dividend could become unsustainable – which is not an ideal situation. Old Republic International has a low and conservative payout ratio of only 16% of its after-tax income.
Generally speaking, the lower a company’s payout ratios, the more resilient its dividend.
Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.
Have Profits and Dividends Increased?
Stocks of companies that generate sustainable earnings growth often offer the best dividend prospects because it’s easier to raise the dividend when earnings rise. If business goes into recession and the dividend is reduced, the business could experience a sharp drop in value. That’s why it’s heartwarming to see Old Republic International’s revenue skyrocket, up 27% annually over the past five years.
Another key way to measure a company’s dividend outlook is to measure its historical rate of dividend growth. Old Republic International has experienced dividend growth of 13% per year on average over the past 10 years. It’s great to see earnings per share increasing rapidly over several years, and dividends per share increasing at the same time.
The bottom line
Does Old Republic International have what it takes to maintain its dividend payments? Typically, companies that grow rapidly and pay a small fraction of the profits keep the profits to reinvest in the business. It is one of the most attractive investment combinations according to this analysis because it can create substantial value for long-term investors. We think it’s a pretty appealing combination and would be interested in investigating Old Republic International more closely.
So while Old Republic International looks good from a dividend standpoint, it’s still worth being aware of the risks involved in this title. Concrete example: we have spotted 1 warning sign for Old Republic International you must be aware.
A common investment mistake is to buy the first interesting stock you see. Here you will find a list of promising dividend paying stocks with a yield above 2% and an upcoming dividend.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
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