Organon & Co. (NYSE:OGN) has projected a significant 85.8% EPS growth for the next year, according to recent announcements. This comes alongside the company's commitment to maintain its dividend payout, despite a considerable 47% drop in its stock price over the last three months. The firm's shareholders are set to receive a $0.28 per share dividend on December 14, reflecting a substantial yield of 8.9%.
The company's previous dividends were robustly covered by earnings and cash flow, indicating that a significant part of the earnings has been reinvested into the firm. If the expected EPS growth is sustained, Organon's payout ratio could be around 26%, suggesting potential sustainability of its dividend.
However, the company's track record shows inconsistency in maintaining dividends over longer periods. Organon has held steady dividends for only two years without any major changes in payment amounts during this time. Furthermore, the company's EPS has been shrinking at a rate of 36% per year over the past three years, which could put pressure on future dividends unless this trend reverses.
Despite these challenges and the declining EPS, Organon appears to generate sufficient cash to potentially maintain the dividend in the short term. However, these factors contribute to making it a less appealing dividend stock for investors seeking long-term stability.
InvestingPro Insights
Incorporating real-time data from InvestingPro, Organon & Co. (NYSE:OGN) currently has a market capitalization of 3170M USD and a P/E ratio of 5.48 as of Q3 2023. Despite a declining trend in earnings per share, the company's P/E ratio remains relatively low. The company's revenue, as of the last twelve months leading up to Q3 2023, stands at 6150M USD with a gross profit margin of 60.7%.
InvestingPro Tips suggest that the stock is in oversold territory, indicated by the RSI, and is trading near its 52-week low. Despite the stock taking a significant hit over the last week, the company continues to pay a significant dividend to shareholders, which aligns with the article's focus on Organon's commitment to maintaining its dividend payout.
Moreover, four analysts have revised their earnings downwards for the upcoming period, which may be a factor to consider given the company's projected EPS growth. Yet, it's important to note that the company has been profitable over the last twelve months and analysts predict the company will remain profitable this year.
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