The average dividend yield in the S&P 500 Index remains low at 1.3%. As a result, income investors should focus on higher-yielding securities if they want additional income from their stock portfolios.Even better, investors can buy high yield stocks when they are also undervalued, which could lead to high total returns in the coming years.The following 3 undervalued high dividend stocks have yields above 5%, and high total return potential. Ford Motor Co. (F)Ford Motor Company was first incorporated in 1903 and in the past 120 years, it has become one of the world’s largest automakers. It operates a large financing business as well as its core manufacturing division, which produces a popular assortment of cars, trucks, and SUVs. Ford could produce $170+ billion in revenue this year and it trades with a $40 billion market capitalization.Ford posted second quarter earnings on July 24th, 2024, and results were significantly weaker than expected. Adjusted earnings-per-share came to 47 cents, which was 21 cents worse than expected. Automotive revenue was $44.81 billion, which was up 5.6% year-on-year, but $70 million lower than expected.The company’s margins eroded in the second quarter as increased warranty costs and losses associated with its unsuccessful EV division. Management noted the company is working to improve quality and reduce complexity, which should help over time to rebuild margins.Adjusted free cash flow was up $300 million to $3.2 billion. Sales of hybrid vehicles rose 34% year-over-year, or 9% of total volume globally.Ford stock currently yields 7% and we expect annual returns above 11% per year over the next five years. Organon & Co. (OGN)Organon & Co. is a global healthcare company dedicated to the improvement of women’s health and well-being. Established in 2021 as a spinoff from Merck & Co. (MRK), Organon focuses on providing a broad range of healthcare solutions through its diverse portfolio, which includes contraceptives, fertility treatments, and a range of established medicines.The company operates in over 140 countries, leveraging its deep expertise and innovation in women’s health to address unmet medical needs and support long-term health outcomes.On August 6th, 2024, Organon announced second quarter results for the period ending June 30th, 2024. For the quarter, revenue of $1.61 billion was unchanged from the prior year, but was $10 million below expectations.Adjusted earnings per-share of $1.12 compared unfavorably to $1.31 in the prior year, but was $0.04 ahead of estimates. Excluding the impact of currency exchange, revenue grew 2% for the year.For the quarter, revenue for Established Brands, which contributed 60% of the total, fell 1% as gains from recent licensing agreements and a recovery in certain injectable steroid products was offset by weaker volumes in China and price revisions in Japan. Women’s Health, which contributed 28% of sales, continued to see a return to growth, with sales higher by 3% year-over-year. Growth continues to be driven by the ongoing higher demand for fertility products.Using the current share price and expected earnings-per-share for 2024, Organon trades with a price-to-earnings ratio of 4.6. This is an incredibly low valuation relative to other healthcare companies. OGN stock currently has a dividend yield of 5%. Lincoln National (LNC)Lincoln National Corporation offers life insurance, annuities, retirement plan services and group protection. The corporation was founded in 1905.Lincoln National reported second quarter 2024 results on August 1st, 2024, for the period ending June 30th, 2024. The company generated net income of $5.11 per share in the quarter, which compared favorably to $2.94 in the second quarter of 2023. Adjusted income from operations equaled $1.84 per share compared to $2.02 in the same prior year period.Additionally, annuities average account balances rose by 6.8% to $158 billion and group protection insurance premiums grew 2.8% to $1.3 billion.Following Lincoln’s Fortitude Reinsurance deal, and the announcement of its Osaic deal, the company has laid out the long-term outlook for its target operating income earnings mix. It is targeting for Annuities to account for 45% to 55% of its earnings mix, group to account for 25% to 35%, retirement to be 5% to 15%, and life to make up the remaining 5% to 10%.This means Lincoln will be reducing its exposure to annuities, increasing its exposure to group and life, while retirement will remain in its current range.Today the dividend appears to be in safe territory with an expected payout ratio of 30% for 2024. We expect annual returns above 10% per year for LNC over the next five years.More By This Author:3 Top Apartment REITs For Dividend Investors
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