In recent years, Orchid Island’s deteriorating fundamentals have resulted in a considerable reduction in dividend payments to stockholders.
Orchid Island now pays a monthly dividend of $0.065 per share, up 18% from the previous year’s payout. Orchid Island’s dividend payout remains below the $0.08 per share monthly dividend it was paying in early 2020, despite the dividend hikes in 2020.
Looking back farther, Orchid Island’s monthly dividend distribution peaked at $0.18 per share in 2014, but has since been cut several times.
The trust now pays $0.78 per share in dividends on an annually basis. The stock has a 13.9 percent dividend yield based on its most recent closing price. Given that the average dividend yield of the S&P 500 Index is now below 2%, this is a massive dividend yield.
Orchid Island, on the other hand, has too many warning lights to be deemed a good investment, including the trust’s frequent dividend cuts and uneven profitability over the last few years.
Furthermore, Orchid Island has been issuing shares at a rapid rate in recent years. Orchid Island’s share count has soared since 2013, despite the trust reducing its outstanding shares by 7.4 percent in 2018. Shareholders will pay a high price for this in the form of dilution.
Orchid Island is not a good pick for investors hoping for consistent dividend payouts from year to year because of its unpredictable dividend history.
Orchid Island stock appears to be a yield trap in the making. While the stock’s continuously high yield may appeal to income investors, overall annualized returns in the last five years have been just 3.3 percent, even when dividend payments are taken into account.
The stock has consistently underperformed the S&P 500 Index, and we predict this trend will continue.
Final Thoughts
Dividend yields that seem too good to be true can be misleading. The nearly 14% dividend yield on Orchid Island is tempting, but this company has all the makings of a yield trap.
The trust’s balance sheet shows a significant amount of debt, and it is issuing shares at an alarming rate. Because of low interest rates, the prognosis for mortgage REITs has brightened in recent years. Orchid Island’s performance remained dismal, notwithstanding this advantage to the mortgage REIT market. The trust’s net interest income increased in the most recent quarter, but its per-share book value decreased.
Due to weak fundamental performance, Orchid Island has slashed its dividend multiple times in recent years. Mortgage REITs, such as Orchid Island, should be approached with caution. As a result, income investors would be better served by purchasing higher-quality dividend equities that pay out more consistently.
Is ORC a good dividend stock?
The conventional Real Estate Investment Trusts, or REITs, are generally recognizable to most investors. The majority of REITs hold actual real estate, lease it to tenants, and use the rental income to pay dividends.
Mortgage REITs, on the other hand, are a type of REIT that many investors are unfamiliar with. These REITs don’t own real estate; instead, they invest in mortgage-backed securities.
Mortgage REITs have substantially greater dividend yields than traditional REITs, but this does not mean they are better investments.
Orchid Island Capital (ORC), for example, is a mortgage REIT with an extraordinarily high dividend yield of approximately 14%. Orchid Island provides monthly dividends, providing an attractive mix of a high yield and regular dividend payments. It’s one of only about 60 equities that pay out a monthly dividend.
By clicking on the link below, you can download our full Excel spreadsheet of all monthly dividend stocks (together with important characteristics like dividend yield and payout ratio).
Is ORC a good long term investment?
Orchid Island Capital (ORC) not only appears to be a strong mid- to long-term investment for dividend-seeking investors, but it also compares well to its competitors, with a forward-looking dividend yield of approximately 14%.
What dividend does ORC pay?
ORC pays a $0.78 per share dividend. ORC pays a 17.57 percent yearly dividend yield. The dividend paid by Orchid Island Capital is higher than the US REIT – Mortgage industry average of 8.9% and the US market average of 4.43 percent.
How does ORC stock make money?
Overview. ORC is a real estate investment trust (mREIT). In the United States, it invests in residential mortgage-backed securities (RMBS). Single-family residential mortgage loans are used to underpin the company’s RMBS.
Is Orc stock a REIT?
To the extent that we currently distribute all of our REIT taxable income (as defined in the Code) to our stockholders, we operate to qualify to be treated as a real estate investment trust (“REIT”) for federal income tax purposes and will not be liable to U.S. federal corporation income tax.
Why is Orc stock dropping?
Orchid Island Capital (NYSE: ORC) saw its shares tumble 11.4 percent today after the business issued first-quarter earnings expectations and an analyst downgraded the stock.
How long do you have to hold a stock to get the dividend?
You must keep the stock for a certain number of days in order to earn the preferential 15 percent tax rate on dividends. Within the 121-day period around the ex-dividend date, that minimal term is 61 days. 60 days before the ex-dividend date, the 121-day period begins.
What does ORC company do?
Opinion Research Corporation is a Princeton, New Jersey-based demography, health, and market research firm. Claude Robinson and George Gallup formed the company in 1938, but Gallup left in 1939. On August 4, 2006, InfoUSA purchased Opinion Research Corp for $12 per share in cash. The company declared its return to independent status on July 1, 2011, following a partnership and majority investment from Lake Capital.
ORC’s global headquarters are in Princeton, with offices around the United States, Europe, and Asia Pacific. ORC is a customer engagement strategy, market planning and development, employee engagement, corporate brand and reputation management, competitive intelligence, and on-demand business intelligence firm that was founded in 1938.
ORC has offices in Princeton, New York City, Chicago, Boston, Washington, D.C., Minneapolis, and Seattle. It also has offices in Asia as NWC Opinion Research, with offices in Australia, Singapore, Hong Kong, and China; in Europe as ORC International, with offices in London, Manchester, and Edinburgh; and in the United States as ORC, with offices in Princeton, New York City, Chicago, Boston, Washington, D.C., Minneapolis, and Seattle.
ORC is a founding member of the Council of American Survey Research Organizations (CASRO), a member of the European Society for Opinion and Marketing Research (ESOMAR), a member of the Association of Market and Social Research Organizations in Australia, and a member of the Market Research Society Company Partner Service in the United Kingdom.
Through its relationship with NYSE Euronext on the annual NYSE Euronext CEO Report, which surveys CEOs of the New York Stock Exchange’s listing businesses on themes ranging from globalization and governance to strategy and human resources, the company’s research is seen all over the world.
What is nly dividend?
NLY pays a $0.88 per share dividend. NLY pays a 10.77 percent yearly dividend yield. The dividend paid by Annaly Capital Management is higher than the US REIT – Mortgage industry average of 9.01 percent and the US market average of 4.47 percent.
