Recent Investment

Lately I was writing about my watch list where I had 2 stocks on my radar. One was American Reynolds with offering an attractive yield of around 3.9%. But unfortunately, after the offer of BAT the stock price increased by almost 20% so I honestly waited too long and missed that deal :(.

Nevertheless, in the last week there came up another opportunity as the price of my second stock dropped by almost 10% after releasing their quarterly earnings, which were a little behind the market expectations. In my opinion this was a typical market overreaction, but anyway I liked it :).

Now the company offers an attractive yield of 4.5%, and the name is Old Republic International an insurance company, which increased its dividends since 34 years and with very decent payout ratio of 51 %. One weakness of ORI is that it only increases its dividend by 1 cent per year, but considering the current yield I am ok with that.

Short summary of Old Republic International

Old Republic International is an insurance company and operates in the following segments:

  • General Insurance
  • Mortgage Guaranty
  • Title Insurance Groups

The company was founded in 1923 and is located in Chicago.

Through its recent drop the share price is now 17.10% away from its 52 week of 20.00 USD and is currently trading at 16.58 USD.

ori

Source: Morningstar.com

After all I bought 80 shares of ORI, which will add 60 USD to my yearly dividend income considering a dividend rate 0.75 USD, before taxes of course.

ORI is now my second insurance company besides the Münchner Rück. A third one is also on my radar, it is the german insurance company Allianz.

My new dividend Income

Before taxes my forward full year dividend income is now at 1081.62 EUR with a yield on costs of 3.80% and after taxes it is at 783.38 EUR with a yield on costs of 2.75%. My goal until the end of 2017 is to have a dividend income of 1200 EUR after tax.

Please be aware this might vary considering the changes in the exchange rate USD to EUR.

Honestly I am now very happy to finally have ORI in my portfolio as it was on my list for a very long time.

To sum up one deal is better than no deal and market overreactions are the best friends of the long-term investors :).

 

What do you think about ORI? Do you also have it in your portfolio?

6 Comments

  1. Ciao DCF,
    I have bought ORI myself on Thursday, I thought I was the only one in the community following them! I liked them a lot but not at the past valuation, now it’s more in the right “league” for me and I have decided to buy 100 shares. It’s a good business, boring and pretty stable, dividend growth is not stellar but it’s nothing that I am really concerned about, as 4.5% is pretty good and above my average. Glad to have you as a fellow shareholder!
    Ciao caio
    Stal

    • Hi Stalflare,

      yeah it looks like that ORI is not the favorite stock in the community, I guess it comes from its relatively small market capitalization. But anyways I am so happy to have it finally in my portfolio 🙂

      Cheers

  2. The 1% annual increase is probably what has kept many DG investors. away. It’s not enough to cover inflation. It’s a god yield though. I’d rather own a stock that never cuts a dividend, than one that increase too fast and cuts. Congrats on the buy.

    • Hey IH,

      the 1% annual increase isn’t really something for DGI but some stocks first need to increase their dividends to reach such a yield.
      So I am fine with the yield and payout ratio as well.

  3. Nice pick up with ORI. This name continues to be on my watch list and I’m happy to see someone pull the trigger on this name. As you mentioned, ORI is not a dividend growth machine but rather a high current yielding stock which is why you would buy it in the first place. It’s dividend payout is well managed and looks to be quite safe based on current numbers. The insurance space is generally known to produce solid, boring stocks. I hold AFL and CB but have considered TRV and ORI too. Thanks for sharing.

    • HI DivHut,

      thanks for the comment, yes ORI is not a dividend growth machine and it probably will never be. That’s why I was waiting such a long time to finally buy it,
      with a yield below 4% it is not very attractive.

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