Who loves monthly dividends? Who loves high dividend yielders? How about a way to high yield monthly dividend payer? I have been looking at this high yield monthly dividend payer for a while. They have a mega dividend yield of 15%. Orchid Island Capital (ORC) is the company that has this high yield and pays monthly.
Orchid Island Capital (ORC) is an mREIT, or mortgage real estate investment trust. They invest in RMBS (residential mortgage back securities) of different types. Their headquarters is in Vero Beach, Florida and they were founded in 2017. They have a market cap of only $350 million. They are much smaller than a lot dividend paying companies.
Interest rates seem like they are going to be rising. If interest rates rise, then mortgage interest rates will go up. As mortgages get paid off, new one will be bought. I do not know what average yield they get, but let’s use an example. If yield goes from 4% to 5%, then that is an increase of 25% revenue from interest. While that will not happen overnight, this will add a lot of positive headwinds for collecting interest in the future. Using the example, say they add or replace 20% of their portfolio per year. This will add a 5% revenue increase per year. I am not sure how close to reality this example is, but I think it provides a nice example of increasing interest rates. And if they start making more money, the stock price and/or dividend can go up. We like seeing positive headwinds.
High Yield Monthly Dividend Payer
They started out paying 13.5 cents, then 18 cents, and currently 14 cents per share per month. At the current share price, they are paying a 15% dividend yield. They started paying a dividend in March 2013, so they a relatively new dividend payer. However, they were only founded in 2010. Being a smaller company, we feel this does add extra risk to the dividend. With Orchid Island Capital (ORC) being a REIT, they are required to pay out 90% of earnings. We could see the dividend going up and down over time. However, they did just change the payment for their dividends. They use to pay their dividends at the end of the month, but now they pushed it out about 10 days to the 9th and 10th of the following month. That could be a red flag. But we are rolling the dice.
What I bought
On 12/22/16, I bought a 100 shares of Orchid Island Capital (ORC) for $1,106.50, including those Orcish armored commissions. Warcraft anyone? Orchid Island Capital (ORC) will provide a nice $168 a year in dividends. This will help me upgrade my castle to keep those pesky elves out. If you not a fan of Warcraft, then those references might be dumb, but, hey, I put them in. We are happy to add this monthly high yield dividend payer to our collection of stocks. Plus, we will be getting our first dividend expiration date 12/28/16, so we will be getting 1.2% of our money back real soon.
We like our new high yield monthly dividend payer, do you? Think this adds to much risk? Think I lost it? Please feel free to share your thoughts in the comment section below.
Disclosure: We own shares in ORC