Upcoming Catalysts Position Perrigo For Sustained Long-Term Dividend Growth

Core Viewpoint - Perrigo has a strong history of increasing dividends for 20 consecutive years and is positioned to achieve Dividend Champion status, supported by several catalysts in 2024 that could enhance share price and dividend growth [2][26]. Company Overview - Perrigo is a leading provider of over-the-counter medications and therapeutic products, holding a 49% market share in self-care products in the USA, Canada, Europe, and Australia [3][5]. - The healthcare sector is expected to grow long-term due to aging populations and the increasing demand for self-care products [5]. Recent Challenges and Recovery - Perrigo faced difficulties following a proposed acquisition by Mylan, which merged with Upjohn to form Viatris in 2020, impacting its performance over the past decade [5][6]. - The company had to shut down a Wisconsin infant formula plant due to FDA findings, leading to a 25% decline in share price. However, the plant has resumed operations, and revenue from it is expected to contribute positively in 2024 and 2025 [7][9]. Catalysts for Growth - Manufacturing and Supply Chain Optimization: The new CEO aims to unlock $150-$200 million in adjusted operating income by 2025 through initiatives like reducing SKU complexity and improving business planning [10][11][14]. - Good-Better-Best Branding Strategy: Perrigo plans to introduce a mid-tier product line in the USA, which could improve gross margins by 10-12 percentage points and tap into a growing market segment [19][20]. - Launch of Opill: The introduction of Opill, an OTC oral contraceptive, is expected to capture a significant market share, with strong retail support and potential insurance coverage enhancing its adoption [20][21]. - Upcoming Investor Day: The company plans to host an investor day to outline strategies for increasing shareholder returns, focusing on dividend growth, deleveraging, and reinvestment in higher-margin product categories [22][25]. Financial Performance and Outlook - Perrigo's gross margin has improved from 36.5% in 2021 to a target of over 40% in the long term, driven by operational efficiencies and pricing strategies [17][18]. - The company is on track to reduce its net leverage ratio to below 3.0X adjusted EBITDA by the end of 2025, contributing to earnings growth [23][25]. Market Position and Future Prospects - The self-care market is projected to grow at a 4% CAGR, with Perrigo positioned to benefit from this trend through its strategic initiatives and product offerings [32][33]. - The company is recognized for its consistent dividend payments, with a current yield of 3.5%, which is attractive compared to other investment options [26][39].