Dividend Growth Stock Overview: Old Republic International Corporation

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About Old Republic International Corporation

Old Republic International Corporation provides specialty insurance products to a variety of businesses and industries. Although the company’s primary focus is on the transportation and financial industries, Old Republic provides other types of insurance through its multiple subsidiary operating centers, including title insurance and home warranties.

Nearly 23% of Old Republic’s gross underwriting volume comes from the transportation industry, with 18% from the trucking industry and the remainder from the aviation, auto warranty and travel insurance lines. Another 10% of Old Republic’s underwriting volume comes from the contracting industry.

Old Republic has 19 subsidiary operating centers. Significant contributors to Old Republic’s insurance revenue include Great West Casualty Company (commercial transportation liability and physical damage insurance), PMA Companies, Inc. (property and casualty risk products), Old Republic Construction Program Group (insurance for trade contractors and large construction projects), and BITCO Insurance Companies (workers compensation, commercial auto and general liability for the forest products, oil & gas, and construction industries).

In the year ending December 31, 2014, Old Republic earned $409.7 million, down 8.5% from 2013’s earnings of $447.8 million. Earnings per share were $1.44, down 8.3% from the $1.57 earned per share in 2013. General insurance and title insurance products provided 36% and 15% of Old Republic’s 2014 EPS. A plurality of earnings came from Old Republic’s investment gains, which provided nearly 42% of 2014’s EPS. Old Republic’s revenues were flat from 2013 to 2014.

Old Republic’s debt to capitalization ratio increased from 13.1% at the end of 2013 to 19.7% at the end of 2014 due to the sale of an additional $400 million in 10 year notes at 4.875%.

The company is a member of the S&P Mid Cap 400 index and S&P’s High Yield Dividend Aristocrats index, and trades under the ticker symbol ORI.

Old Republic International’s Dividend and Stock Split History

Old Republic Dividend Growth

Since 2009, Old Republic has increased the dividend payout by less than 2% per year.

Old Republic International has paid dividends since 1941 and increased them since 1982. The company traditionally announces dividend increases in February, with the stock going ex-dividend in March. Most recently, Old Republic announced a penny per share dividend increase in February 2015, giving the stock an annualized dividend of 74 cents. I expect Old Republic to announce its next dividend increase in February 2016.

Until 2008, Old Republic had a decent record of dividend growth. The company increased its dividend a minimum of 6.4%, and often more than 10% a year. Following the financial crisis of 2007 – 2008 – which affected Old Republic’s mortgage and financial insurance lines – the company severely slowed its rate of dividend growth. Since 2009, Old Republic’s dividend has increased by 1 cent per share, which translates into a growth rate of less than 2% a year. Reflecting this, Old Republic’s 5-year compounded annual dividend growth rate (CADGR) is 1.41% and 10-year CADGR is 3.75%. The company’s longer-term record is better, with a 20-year CADGR of 9.48%.

Old Republic International has split its stock 7 times in the last 25 years. These included three 3-for-2 splits in May 1996, May 1998 and December 2003, a 2-for-1 split in May 1992, an 11-for-10 split in April 1991, and a 105-for-100 split in April 1990. The most recent stock split was in December 2005 when Old Republic split its stock 5-for-4. For each share of Old Republic stock you owned in April 1990, you would now have nearly 9.5 shares of Old Republic stock.

Over the 5 years ending on December 31, 2014, Old Republic International Corporation stock appreciated at an annualized rate of 14.32%, from a split-adjusted $7.492 to $14.63. This outperformed the 13.0% annualized return of the S&P 500 but trailed the 14.9% annualized return of the S&P Mid Cap 400 index during this time.

Old Republic International’s Direct Purchase and Dividend Reinvestment Plans

Old Republic has both direct purchase and dividend reinvestment plans. Like most plans, there are fees associated with both share purchases and sales. As a new investor, you’ll need to open an account with a minimum of $1000 and you’ll pay a setup fee of $15. Any additional direct purchases must be at least $100. You’ll be assessed a service fee of $5 plus a brokerage commission of 6 cents per share on all direct purchases by check. For direct purchases through automatic bank debits, the fees are $3.50 for an individual debit and $2 per debit when you set up a monthly purchase plan. There are no fees when buying shares by reinvesting dividends.

When you go to sell your shares, you’ll pay a service fee of $15 per sale plus a brokerage commission of 12 cents per share. You’ll also be assessed a $5 service fee to have the sales proceeds directly deposited to your bank account.

Helpful Links

Old Republic International’s Investor Relations Website

Current quote and financial summary for Old Republic International (finviz.com)

Information on the direct purchase and dividend reinvestment plans for ORI

Want to find out about more great dividend growth stocks?

Check out the list of current S&P Dividend Aristocrats.

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