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Orchid Offers 20.1% Dividend Yield: A Powerful Income Play?

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Key Takeaways

  • ORC offers a 20.1% dividend yield and has raised its dividend three times in the past five years.
  • ORC holds $446.5M in liquidity with no debt as of March 31, 2025, supporting capital distributions.
  • ORC shares are up 1.4% YTD and trade at a 0.80X P/TB ratio, below the industry average of 0.98X.

One of the most closely watched aspects of Orchid Island Capital (ORC - Free Report) is its financial profile, particularly its dividend policy.

This specialty finance mREIT company, which invests in residential mortgage-backed securities (RMBS) on a leveraged basis, offers favorable long-term stockholder returns and a substantial dividend yield. Income-seeking investors have a large appetite for REIT stocks, as U.S. law requires REITs to distribute 90% of their annual taxable income in the form of dividends.

ORC has a record of paying out regular dividends, currently yielding a staggering 20.1% compared with the industry average of 12.4%. The company has increased its dividend three times over the past five years.

Dividend Yield

 

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Dividend aside, ORC has a share repurchase plan in place. In 2022, the board of directors approved an increase in the authorization up to an additional 4.3 million shares, bringing the remaining authorization under the stock repurchase program to 6.2 million shares. As of April 25, 2025, the company had the authorization of 2.7 million shares available under the program.

Orchid has a strong liquidity position. As of March 31, 2025, the company had $446.5 million in cash and cash equivalents, and unpledged securities. It has no debt as of the same date.

Hence, given a strong liquidity position, ORC’s capital distribution seems sustainable.

How ORC Competes With AGNC & NLY in Terms of Dividends

AGNC Investment Corp. (AGNC - Free Report) has a record of paying monthly dividends, currently yielding 15.3%. It now sits at a payout ratio of 81%. Dividends aside, AGNC Investment has a share repurchase plan in place. In October 2024, the company’s board of directors announced a new plan authorizing it to repurchase up to $1 billion of common stock through Dec. 31, 2026. As of March 31, 2025, the full authorization was available for repurchase. As of March 31, 2025, AGNC Investment’s liquidity, including unencumbered cash and Agency MBS, was $6 billion. Given this, AGNC’s capital distribution seems sustainable. 

Annaly Capital Management, Inc. (NLY - Free Report) also has a record of paying monthly dividends, currently yielding a staggering 14.3%. It now sits at a payout ratio of 101%. In March 2025, Annaly announced a cash dividend of 70 cents per share for the first quarter of 2025, marking a 7.7% hike from the prior payout. Till the end of the first quarter of 2025, the company had $7.5 billion of total assets available for financing, including cash and unencumbered Agency MBS of $4.7 billion, which can readily provide liquidity in times of adverse market conditions. This will support Annaly's capital distribution in the future.

Orchid’s Price Performance, Valuations & Estimates

ORC shares have gained 1.4% year to date compared with the industry’s growth of 7.3%. 

Price Performance

 

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From a valuation standpoint, Orchid trades at a forward price-to-tangible (P/TB) ratio of 0.80X, below the industry’s average of 0.98X.

Price-to-Tangible Book TTM

 

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The Zacks Consensus Estimate for ORC’s 2025 and 2026 earnings implies year-over-year rise of 394.4% and 24.5%, respectively. Estimates for 2025 and 2026 have been unchanged over the past 30 days.

Earnings Estimates

 

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Orchid currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks a#1 Rank (Strong Buy) stocks here.


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AGNC Investment Corp. (AGNC) - free report >>

Annaly Capital Management Inc (NLY) - free report >>

Orchid Island Capital, Inc. (ORC) - free report >>

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