Published on June 27th, 2024 by Felix Martinez
High-yield stocks pay out dividends that are significantly more than market average dividends. For example, the S&P 500’s current yield is only ~1.2%.
High-yield stocks can be very helpful to shore up income after retirement. A $120,000 investment in stocks with an average dividend yield of 5% creates an average of $500 a month in dividends.
We have created a spreadsheet of stocks (and closely related REITs and MLPs, etc.) with dividend yields of 5% or more…
You can download your free full list of all securities with 5%+ yields (along with important financial metrics such as dividend yield and payout ratio) by clicking on the link below:
Next on our list of high-dividend stocks to review is Organon & Co. (OGN).
Auburn is part of our ‘High Dividend 50’ series, where we cover the 50 highest yielding stocks in the Sure Analysis Research Database.
Business Overview
Source: Investor Presentations
Source: Investor Presentations
The first quarter’s gross margin was 59.0% as-reported and 62.1% on a non-GAAP adjusted basis, reflecting impacts from product mix and higher material and distribution costs.
Overall, Organon demonstrated a robust start to 2024, maintaining its commitment to delivering financial targets and improving women’s health.
Growth Prospects
Organon & Co. is well-positioned for robust growth prospects, driven by its strategic focus on expanding its women’s health portfolio and enhancing its biosimilars segment. The global demand for women’s health products is rising.
By leveraging its existing product lines and investing in innovative solutions, the company aims to address critical gaps in women’s health, such as contraceptives, fertility treatments, and menopause management.
Additionally, Organon’s global reach and established presence in over 140 countries provide significant opportunities for market expansion and increased revenue streams, particularly in emerging markets where access to women’s healthcare is still developing.
Moreover, Organon’s growth strategy includes a strong emphasis on its biosimilars business, which is poised to benefit from the increasing acceptance and adoption of biosimilars worldwide. As healthcare systems seek cost-effective alternatives to high-priced biologics, Organon’s biosimilars offer a compelling value proposition.
The company is actively pursuing regulatory approvals and market launches for new biosimilars, which will further diversify its revenue base and enhance profitability. Strategic partnerships and acquisitions are also integral to Organon’s growth agenda, enabling it to expand its product pipeline and enter new therapeutic areas.
With a solid financial foundation and a clear vision for innovation and expansion, Organon is well-equipped to capitalize on emerging opportunities and drive sustainable long-term growth.
Competitive Advantages & Recession Performance
Organon’s competitive advantages are rooted in its specialized focus on women’s health, a diverse and established product portfolio, and its strategic expansion into biosimilars.
During economic recessions, Organon’s performance is bolstered by the essential nature of its products, particularly in the women’s health and established brands segments. Healthcare products and services are generally less sensitive to economic downturns, as they are critical to maintaining health and well-being.
This inherent demand stability helps Organon maintain steady revenue streams even during challenging economic periods. The company’s focus on cost-effective biosimilars can become increasingly attractive during recessions, as healthcare systems and patients look for more affordable treatment options.
Overall, Organon’s resilient product offerings and strategic focus on essential healthcare needs position it well to weather economic fluctuations.
The company was not around during the 2008 -2010 Great Recession, so we do not have information on how earnings performed during that time period.
Dividend Analysis
Organon & Co.’s current annual dividend is $1.12 per share. At around $20 per share, Organon stock has a high yield of 5.4%.
Given Organon’s outlook for 2024, EPS is expected to be $4.44. As a result, the company is expected to pay out roughly 25% of its EPS to shareholders in dividends.
The dividend appears to be sustainable, and we estimate the company will grow it at a 2% rate going forward. Therefore, we view OGN stock as desirable for investors focusing primarily on income.
Final Thoughts
Organon is projected to return 9.3% annually through 2029. Our projected return stems from an earnings growth rate of 3%, a 5.37% starting dividend yield, and a small contribution from multiple expansion.
Shares are up more than 80% over our last two reports.
We rate Organon as a hold due to projected returns. We see the stock as attractive for income investors due to the high dividend yield, and low payout ratio.
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