Portfolio Update
The FiveTwenty portfolio received $193.67 in dividends in the past week. AFL, BKH, ENB, FTS, SJM, SWX paid their quarterly dividend during the week.
| Past Week Dividend | $193.67 |
| Current Quarter Dividend (Q3 2021) | $390.74 |
| LifeTime Dividend | $896.08 |
| Estimated Annual Dividend | $2,620.42 |
The capital allocation for the week of 09/05/2021 to 09/11/2021 will be used to add to our position in Old Republic International (NYSE: ORI)
ORI – Position Update
Since our last check-in on ORI in week 22 of 2021, the company reported Q2 2021 earnings on 07/22/2021. Additionally, the share price decreased 3.69% from $26.26 to $25.29 since then.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 40 years | 40 years | |
| Yield | 3.44% | 3.24% | 4.4% |
| Payout Ratio | 31.18%1 | 34.27%2 | NA |
| P/E | 9.061 | 10.592 | NA |
1 computed using operating EPS of $2.79 as of Q2 2021
2 computed using operating EPS of $2.48 as of Q1 2021
Q2 2021 earnings report
Did ORI’s latest earnings report raise any warning flags?
In Q2 2021, ORI continue to show strong growth in profitability of the General Insurance and Title Insurance businesses. Additionally, solid underwriting results produces a combined ratio for Q2 2021 were 90.6% compared to 96.1% for the same period a year ago. The company experiences healthy growth in its operating revenue, operating net income and operating EPS. Overall, operating revenue grew 26.9%, operating net income increased 78.4%, and operating EPS were 73.8% higher compared to Q2 2020.
| Op. Revenue (in millions) | Op. Net Income (in millions) | Op. EPS . | |
| Q2 2020 | $1,680 | $123.8 | $0.42 |
| Q2 2021 | $2,132 | $220.9 | $0.73 |
| % Change | 26.9% | 78.4% | 73.8% |
Additional noteworthy developments during the quarter:
- As of Q2 2021, consolidated net premiums and fees earned increased 29.1% for the quarter and 23.5% for the year-to-date period.
- Book value per share was $22.59 as of June 30, 2021, up form $20.75 at December 31, 2020.
- On August 13, 2021, ORI declared Q3 2021 dividends of $0.22 per share. Additionally, the company also declared a special one-time cash dividend of $1.50 per share to be paid on 10/6/2021 to shareholders of record on 09/15/2021.
Thesis
Why are we adding to our position in ORI?
Q2 2021 earnings and developments following that report confirmed our original investment thesis, that ORI’s profitability is on solid grounds. Furthermore, we view the small pullback in the share price as an opportunity to expand our position at an attractive price point.
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