We recently compiled a list of the Retirement Stock Portfolio: 7 Safe Dividend Stocks To Invest In. In this article, we are going to take a look at where Old Republic International Corporation (NYSE:ORI) stands against the other dividend stocks.

As investors near retirement, achieving financial stability becomes a top priority. Among the various investment choices, steady dividend payments hold particular appeal for their reliability and security. Dividends, which are a share of a company’s profits distributed to shareholders, offer a dependable source of income.

Research shows a growing trend of Americans retiring earlier than expected, often due to circumstances beyond their control. According to a study by the Transamerica Center for Retirement Studies and the Transamerica Institute, 58% of workers retire earlier than planned. The most frequently cited reasons for early retirement include health-related issues, which account for 46%, followed by employment challenges at 43%, and family obligations at 20%. Interestingly, only 21% cited financial stability as the reason for early retirement. The median retirement age is now 62, falling three years short of the traditional retirement age of 65.

Also read: Retirement Stock Portfolio: 10 Consumer Stocks To Buy

Dividend stocks are becoming an increasingly important component of a well-diversified retirement portfolio for many investors. Carefully selected dividend-paying stocks can provide stability during market downturns and enhance returns during rallies by generating quarterly income that offsets losses and boosts gains. In addition, they can serve as a safeguard against inflation, which has become a growing concern due to rising food and energy costs. Some top-performing companies have consistently increased their dividend payouts year after year for decades. David Giroux, a portfolio manager at T. Rowe Price who manages the firm’s capital-appreciation strategy, spoke about dividend stocks in one of his interviews with Barron’s. Here are some comments from the analyst:

“To have a retirement portfolio that has a significant component of stocks with attractive dividends makes a tremendous amount of sense. If the average company in the market can grow its earnings at 7% to 8% a year, your dividends should be growing at a similar rate.”

Analysts emphasize that while income and growth are essential for savers to sustain a potentially lengthy retirement, this strategy has its limitations and may not suit everyone. They recommend a portfolio diversified across various sectors and companies with substantial cash reserves to support stock buybacks. Dave King, a senior portfolio manager at Columbia Threadneedle Investments, highlighted in an interview with Barron’s the importance of simple diversification. He suggested holding at least eight stocks from different sectors, noting that diversification doesn’t need to be excessive but should include more than a few stocks—ideally more than five, with one representing each broad sector. According to King, when selecting stocks for such a portfolio, it’s important to avoid placing too much weight on Wall Street research. Instead, the focus should be on fundamental, historically proven factors like a company’s credit rating or the reputation of its management, which can provide valuable insight into the reliability of its dividend payments.

Dividend growth stocks are highly sought after for a retirement stock portfolio. Data from S&P Dow Jones Indices highlighted their appeal, showing that the Dividend Aristocrats Index delivered a total return of 12.08% from 1990 to 2019. This outpaced the broader market, which had a return of 9.95% over the same period, making these stocks attractive not only to retirees but to investors of all ages. In this article, we will take a look at some of the best dividend stocks for a retirement stock portfolio.

Our Methodology:

For this list, we used a screener to select dividend stocks that have shown at least 10 years of dividend growth and are spread across various industries, making them suitable for a retirement stock portfolio. From the initial selection, we chose seven stocks, each from a different industry, all with yields of at least 2%. Next, we arranged them in ascending order of the number of hedge funds having stakes in them, according to Insider Monkey’s database of Q3 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)

Old Republic International Corporation (NYSE:ORI)

Number of Hedge Fund Holders: 31

Old Republic International Corporation (NYSE:ORI) ranks fifth on our list of the best dividend stocks for a retirement stock portfolio. The company specializes in underwriting insurance policies tailored for businesses, governments, and various institutions. It generates most of its revenue from these policies, which are primarily issued in the US and provide liability coverage for sectors such as trucking, aviation, construction, healthcare, energy, and more. Another significant aspect of its operations is title insurance, which safeguards lenders or buyers in property transactions against claims like unpaid tax liens or other encumbrances on the property. The stock has surged by nearly 24% so far in 2024.

In the third quarter of 2024, Old Republic International Corporation (NYSE:ORI) posted total operating revenue of $2.1 billion, up 10% from the same period last year. Consolidated net premiums and fees earned grew by 9.6%, supported by robust growth in General Insurance and steady gains in Title Insurance. In addition, net investment income rose by 17.3%, fueled by higher investment yields.

Old Republic International Corporation (NYSE:ORI) remained committed to its shareholder obligation, returning $232 million to shareholders through dividends and share repurchases. Its solid cash position has enabled it to issue special dividends on multiple occasions. Most recently, on December 13, it declared another special dividend of $2.00 per share. It pays a quarterly dividend of $0.265 per share and has a dividend yield of 2.91%, as of December 17. The stock is a good option for retirees because the company holds a 44-year streak of consistent dividend growth.

Old Republic International Corporation (NYSE:ORI) was a popular stock among elite funds at the end of Q3 2024, with hedge fund positions growing to 31, from 25 in the previous quarter, according to Insider Monkey’s database. The stakes owned by these funds have a consolidated value of over $362.2 million.

Overall ORI ranks 5th on our list of the best stocks for a retirement portfolio. While we acknowledge the potential for ORI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ORI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. 

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Disclosure: None. This article is originally published at Insider Monkey.