Lamar Advertising Co's Dividend Analysis
Assessing the Sustainability of Lamar Advertising Co's Upcoming Dividend
Lamar Advertising Co (NASDAQ:LAMR) recently announced a dividend of $1.25 per share, payable on December 29, 2023, with the ex-dividend date set for December 15, 2023. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Lamar Advertising Co's dividend performance and assess its sustainability.
What Does Lamar Advertising Co Do?
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Lamar Advertising Co is an outdoor advertising company organized as a real estate investment trust for U.S. federal income tax purposes. Lamar's core revenue-generating activity is leasing space for advertising on billboards, buses, shelters, benches, logo plates, and airport terminals through short-term agreements. The company is involved in this process from ad copy production to the placement and maintenance of physical advertisements. The vast majority of Lamar's revenue comes from renting ad space on its portfolio of static and digital roadside billboard displays in the U.S. The states of Pennsylvania and Texas house a proportion of these. The company's customers are restaurant, service, healthcare, and retail firms in terms of total revenue.
A Glimpse at Lamar Advertising Co's Dividend History
Lamar Advertising Co has maintained a consistent dividend payment record since 2014. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Lamar Advertising Co's Dividend Yield and Growth
As of today, Lamar Advertising Co currently has a 12-month trailing dividend yield of 4.50% and a 12-month forward dividend yield of 4.55%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Lamar Advertising Co's annual dividend growth rate was 7.00%. Extended to a five-year horizon, this rate decreased to 3.40% per year. Based on Lamar Advertising Co's dividend yield and five-year growth rate, the 5-year yield on cost of Lamar Advertising Co stock as of today is approximately 5.32%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of September 30, 2023, Lamar Advertising Co's dividend payout ratio is 1.23, which may suggest that the company's dividend may not be sustainable.
Lamar Advertising Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Lamar Advertising Co's profitability 9 out of 10 as of September 30, 2023, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Lamar Advertising Co's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Lamar Advertising Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Lamar Advertising Co's revenue has increased by approximately 4.60% per year on average, a rate that outperforms approximately 66.3% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Lamar Advertising Co's earnings increased by approximately 4.40% per year on average, a rate that outperforms approximately 55.47% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 4.60%, which outperforms approximately 60.56% of global competitors, further underscores its growth potential.
Concluding Thoughts on Lamar Advertising Co's Dividend Prospects
In conclusion, while Lamar Advertising Co's dividend payout ratio may raise some concerns regarding sustainability, the company's strong profitability rank and solid growth metrics present a more reassuring picture. The consistent dividend history, coupled with a decent yield and growth rate, could be attractive to investors seeking income. However, as with any investment, it is crucial to monitor the balance between dividend payouts and the company's financial health. Value investors should keep an eye on Lamar Advertising Co's future earnings reports and any significant changes in the company's business strategy or market conditions that could affect its dividend sustainability.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
