Fireproof Investments

390% gains from boring stocks...

Written by Jimmy Mengel
Posted August 31, 2021

Dear Outsider,

I recently found myself in a nice little townhome while I got some life matters figured out. It was a big change of scenery from the large country estate Id become accustomed to, but after a month or so, I really started to feel more “at home.”

I could decorate the place as I wished, with bookshelves, musical instruments, and surrealistic paintings that wouldn’t have worked at my old farm home. While smaller, it did have a coziness that I grew fond of. I even bought a pet lizard which I named Leonard so I had a captive audience to talk with as I plotted the next chapters in my life.

Things were looking up, I thought...

So it was with abject shock and horror that after an evening playing music with friends, I came home to this:

house fire

Both of my neighbor’s houses had been completely incinerated and my front door was kicked in and my home was filled with firemen. 

“You can’t go in there, sir,” one of them shouted to me as I ambled up the stairs in a panic. He eventually explained that my home was secure without any damage, which was a massive relief. I thought I may have lost everything based on the shape of the block. He ran back back to his post at the neighboring fire hose.

I surveyed the wreckage next door and began asking another fireman if everyone made it out. God willing, they did. The house on the corner, however, had a family of five sleeping inside that the fire department had to rescue. Their smoke detector apparently had run out of batteries. 

I again felt blessed that despite the horrors that sometimes accompany life, sometimes you just have to take those little victories, like the fact that your neighbors didn’t burn to death. 

Public service announcement number one: Check the batteries on your smoke detectors!

Public service announcement number two: Make sure you have decent home insurance!

Speaking of insurance, while we’re at it, here’s some portfolio insurance for you...

I wanted to share one of my fireproof Crows Nest dividend stocks today. As longtime readers know, Im a sucker for dividend aristocrats: companies that have raised their dividend for at least 25 years in a row. I stock my retirement portfolio with them because they are so reliable. Sometimes they arent sexy, and sometimes it takes a few years to get those triple-digit returns Im so fond of. 

But they always pay off in the end...

Old Republic International (NYSE: ORI) is about as safe as you get in the insurance investment space. Old Republic International Corporation was founded all the way back in 1887. The company is primarily a commercial lines underwriter, serving many of America’s leading industrial and financial services companies.

It’s a company with a century-long history, including a return that has been beating the market return on average over the past 10 years. It’s also about to become one of my favorite kinds of stocks: a dividend king with 50 years of raises. ORI is sitting around 40 years, with a serious shot at hitting the 50 mark. They haven’t interrupted dividend payouts for 80 years.

Dividend kings are the royalty of yield-paying stocks. To put this in perspective, only about 115 companies have been able to do that for 25 years — my dividend aristocrats. Only 32 have been able to do it for 50. Old Republic may join that list soon...

It provides not only the accident insurance I alluded to above but also a slew of other insurance products like property, liability, life, health, and mortgages — you know, all the fun stuff we have to worry about insuring. Old Republic is also the third-largest title insurer in the entire U.S., and one of America’s 50 largest shareholder-owned businesses. 

Like I said, it’s not as fun as the hype stocks that could make you a fortune overnight, but these are services that all of us need in some form or another. That’s why they’ve been able to put together returns like this over the last 10 years:

ori chart 2

They currently yield a generous 3.34%. But please take a look at the chart: a 271% return if you didnt reinvest dividends, 390% if you did. For plays like this, please reinvest those dividends. Just like having decent insurance, youll be very glad that you did when emergencies crop up. Like not having enough money for retirement.

Thats all for the public service announcements today. Be safe, be well, be invested for the future — whatever that may bring.

Godspeed,
jimmy-mengel-signature-fixed

Jimmy Mengel

follow basic @mengeled on Twitter

Jimmy is a managing editor for Outsider Club and the investment director of several personal finance advisories, The Crow's Nest, and The Adventure Capitalist For more on Jimmy, check out his editor's page.

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