3 Attractive High Dividend Stocks Yielding Over 6%
Income investors can still find high-yielding names with sustainable dividend payouts in this market.
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With the S&P 500 Index yielding less than 2% on average right now, income investors need to look a little harder to find high dividend yields.
Fortunately, investors can still find high dividend stocks even in this market. Even better, there are some high-yielding shares that have sustainable dividend payouts for the long run.
The following three names have yields above 6%, making them attractive for income investors.
Set Your Dividend Investments on This Company's Cycle
Whirlpool Corp. WHR is a leading home appliance company with well-known brands such as Whirlpool, KitchenAid, and Maytag. Roughly half of the company’s sales are in North America, but Whirlpool does business around the world under 13 principal brand names. The $6.5 billion market cap company, which employs about 59,000 people, generated nearly $20 billion in sales in 2023.
On January 29, Whirlpool reported fourth-quarter 2023 results. For the quarter, sales came in at $5.1 billion, which was down 3.4% compared to fourth-quarter 2022. Ongoing earnings per diluted share was $3.85 in the quarter, 1% below last year’s $3.89 per share. For the full year, earnings per share of $16.16 declined 17.7% from $19.64 in 2022. Whirlpool announced 2024 guidance, which sees ongoing EPS coming in at a midpoint of $14.00 on revenue of $16.9 billion.
Additionally, Whirlpool expects cash provided by operating activities to total roughly $1.2 billion, with $600 million in free cash flow. Free cash flow will allow for debt paydown and cash returns to shareholders.
One promising growth catalyst for Whirlpool is a recent transaction designed to restructure the company’s portfolio. On January 17, Whirlpool entered into an agreement with Arçelik A.Ş. Whirlpool is contributing its European major domestic appliance business, while Arçelik will contribute its major domestic appliance, consumer electronics, air conditioning, and small domestic appliance businesses into a newly formed entity.
Whirlpool will own 25% of this new entity, which will have combined sales of over €6 billion, while Arçelik will own the remaining 75%. Additionally, Whirlpool agreed to sell its Middle East and Africa business to Arçelik. The transaction is expected to close by April 2024.
Whirlpool has a dividend payout ratio of approximately 60% for 2024.
WHR stock currently yields 6.3%.
You've Got a Dividend Friend in Pennsylvania
UGI Corp. UGI is a gas and electric utility that operates in Pennsylvania, in addition to a large energy distribution business that serves the entire U.S. and other parts of the world. It was founded in 1882 and has paid consecutive dividends since 1885. Its market capitalization is $5.1 billion.
The company operates in four reporting segments: AmeriGas, UGI International, Midstream & Marketing, and UGI Utilities. UGI's Q1 2024 earnings showed a positive trend with an adjusted EPS of $1.20, up from $1.14 the previous year, indicating a robust start to the fiscal year.
This performance was driven by strong results from UGI International and its natural gas businesses, despite challenges faced by AmeriGas. The company continued its strategic focus on customer growth and infrastructure investment within its regulated utilities, adding over 3,500 customers. Moreover, UGI made progress in exiting non-core energy marketing businesses in Europe, aligning with its strategic goals.
UGI is currently undergoing a strategic review that could significantly impact our estimates, but for now we see the regulated utility business growing at a strong clip while the remainder of the business will likely continue to suffer from meaningful headwinds.
UGI’s main competitive advantage is in its highly diversified business model. It has electric and gas utilities, propane distribution that covers a wide geographic area and diverse customer base, as well as a variety of other energy generation and distribution activities.
This allows it to not only weather downturns in any particular business, but provides several avenues for growth as well. UGI’s strong performance during the Great Recession illustrates this. We expect a ~50% payout ratio for the foreseeable future, indicating excellent dividend safety. UGI has increased its dividend for 36 consecutive years.
UGI stock currently yields 6.3%.
A Healthy Choice for Yield
Organon & Co. OGN is a pharmaceutical company that develops and markets health solutions in a variety of areas. OGN was spun off by Merck & Co. MRK in 2021. Its established brands portfolio consists of nearly 50 products that have lost patent exclusivity and are used for treatment in the areas of cardiovascular, respiratory and dermatology and non-opioid pain management.
Organon’s women’s health portfolio includes fertility and contraception brands, such as Nexplanon/Implanon and Nuva Ring. The company also has a small portfolio of biosimilars which are used in immunology and oncology.
On February 15, Organon announced fourth-quarter and full-year results for the period ending December 31, 2023. For the quarter, revenue grew 7.4% to $1.6 billion, which was $120 million better than expected. Adjusted EPS of $0.88 compared favorably to $0.81 in the prior year and was $0.05 ahead of estimates.
For the year, revenue grew 1% to $6.3 billion while adjusted EPS of $4.14 compared to $5.03 in 2022. Excluding the impact of currency exchange, revenue improved 3% for the year.
For the quarter, Established Brands, which contributed 57% of revenue, grew 3% as volume was higher for respiratory and certain cardiovascular products. Women’s Health, which contributed ~29% of sales, returned to growth as revenue was up 8%. Growth was driven by higher demand for fertility products. Sales for Biosimilars grew 48% due to strong demand for Ontruzant.
Organon does have several factors working in its favor for future growth. The established brands business should provide Organon with strong cash flows as the off-patent products do not require much in the way of the research and development expenses.
Organon provided guidance for 2024 as well, with the company expecting revenue of $6.2 billion to $6.5 billion. We project that the company will earn $4.22 per share in 2024.
OGN has a 2024 dividend payout ratio of 27%, indicating a safe dividend.
OGN stock currently yields 6.3%.
At the time of publication, Ciura had no positions in any stock mentioned.