ASX 200 dividend share Orora Ltd (ASX: ORA) is paying a 50% franked dividend of $0.373 per share. At Thursday’s closing price, this equates to a dividend yield of 14.3%. The company goes ex-dividend on 19 June. This means that as long as you buy before that date, you get the dividend.
Moreover, the company has announced an additional return of capital from a recent asset sale. This raises the overall payment to 18.8% at time of writing for this dividend share.
Orora’s share price has a history of rising prior to the ex-dividend date. The higher the share price you buy in at, the lower the dividend yield, so it would be wise to act very quickly to secure a high yield.
Dividend history
Over a 6-year period, Orora has grown its dividend payment by an average of 13.8% every year. The company also shows all the signs of being well managed. It grows its earnings per share every year, and its share price has also grown by an average of 14% per year over a 6-year period.
Company overview
Orora operates a beverage and packaging business in Australia and the United States. It produces bottles, boxes, cartons and aluminium cans, and general packing products. In October 2019 it sold its Australasian fibre business to Japan’s Nippon for $1.7 billion. This provided the company with a $1.2 billion windfall, half of which it will be returning to shareholders alongside the dividend payment.
At the time of writing, Orora is selling at a price-to-earnings ratio (P/E) of 22.22. This is below the company’s 10-year average. So while it is high, the market has factored in growth given the company’s management history. The Orora share price is still down by 16%, year to date.
Foolish takeaway
I believe this dividend share is a rare income and value investing opportunity. Orora is a good company at a good price with an 18% definite payment within less than a month. The scope for future share price growth is very high over the medium term, and the company will likely continue to pay reasonable dividends based on its history. However, for taxation purposes only 50% of the initial dividend payment is franked.
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More reading
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Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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