Orchid Island Capital is a mortgage real estate investment trust (REIT) based in Vero Beach, Florida. That's just an hour-and-a-half drive north of where Marc and I live. Unlike "regular" REITs that own buildings, mortgage REITs own paper mortgages. Mortgage REITs make money borrowing at lower, short-term rates and lending it out at higher, long-term rates. The difference, or net interest income (NII), is a mortgage REIT's cash flow. Orchid Island Capital earned $91 million in NII in 2020. That was up 55% from the $58.7 million booked in 2019. But that was down 12.75% from the $104.3 million the company collected in 2017. After its dividend cut last year, the mortgage REIT paid out $53.6 million in dividends. Its payout ratio was around 59% - well below SafetyNet Pro's 100% cutoff for mortgage REITs. | SafetyNet Pro is a groundbreaking tool that predicts dividend cuts with stunning accuracy. With it, you can determine the dividend safety rating of nearly 1,000 stocks. Access to SafetyNet Pro is reserved exclusively for subscribers of Marc's newsletter, The Oxford Income Letter. To learn more about SafetyNet Pro and The Oxford Income Letter, click here now. | | |
This year, Orchid Island Capital's dividend obligation will be higher since its monthly dividend and share count have risen since 2020. With growing NII, the company should be able to cover it. However, Orchid Island Capital's dividend has a bad reputation for a reason. As singer Freedy Johnston said, "It isn't just talk, talk, talk." Management has cut the dividend multiple times since June 2015. If NII declines, management won't hesitate to whack the dividend again. Orchid Island Capital's dividend isn't safe. Dividend Safety Rating: F If you have a stock whose dividend safety you'd like us to analyze, leave the ticker in the comments section. You can also see whether we've covered your favorite stock in Safety Net recently. Just click on the magnifying glass in the upper right part of the Wealthy Retirement homepage and type in the company name. Good investing, Kristin | 
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