Should you buy into the Origin Energy share price rise today?

The Origin Energy (ASX: ORG) share price has risen 1.8% so far today. Can Origin continue higher from here, and is it a good buy today?

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The Origin Energy Ltd (ASX: ORG) share price has risen 1.54% today to close at $7.91. This is just shy of last Wednesday's closing price, before Origin shares tumbled sharply on Thursday morning.

Thursday's share price fall came on no news for the company, at the same time that the Australian market was falling generally on rising fears of a global recession. As our market has been recovering since Thursday, and Origin along with it, it seems safe to assume that Origin Energy's share price falls were a symptom of the ASX's woes, not a loss of investor's faith in the company itself.

However, this is simply a return to previous levels. Can Origin continue higher from here, and is it a good buy today?

A solid outlook for Origin Energy in 2020

In Origin's full year report a couple months ago, it announced a statutory profit of $1.211 billion for the 2019 financial year, a 333% increase on 2018. Underlying profit was up 42% to $1.028 billion. It also reported operating cash flow up 35% to $1.325 billion, and adjusted net debt $1.1 billion lower at $5.4 billion.

Origin also announced a final dividend of 15 cents per share, making its full year dividend a fully franked 25 cents per share. At 3.15%, Origin's dividend yield is solid but not outstanding. The company targets 'sustainable shareholder distributions through the business cycle', with a dividend payout range of 30–50% of free cash flow each year. Remaining free cash flow is instead dedicated to growth.

On the same day that the company released its results, Origin CEO Frank Calabria acknowledged that energy markets "faced headwinds, with a highly competitive retail market and regulatory intervention impacting electricity markets." However, the outlook remained cautiously optimistic.

Origin's own executives are clearly feeling some optimism towards the company, with none of them disclosing sales of their shares in the last year, and $263,000 of insider buying. We shouldn't read too much into that, as insiders aren't always right about the future, but it does tell us that those who know most about the company believe in it.

Foolish takeaway

Origin Energy is unlikely to blow the doors off with massive share price gains anytime soon. However, with a respectable dividend ratio of 3.15%, a positive outlook and a share price that keeps bouncing back from every setback, it's certainly worth a look for income investors.

Motley Fool contributor Tyler Jefferson 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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