Omnicom Group Inc's Dividend Analysis
Assessing the Sustainability of Omnicom Group Inc's Upcoming Dividend
Omnicom Group Inc (NYSE:OMC) recently announced a dividend of $0.7 per share, payable on 2024-04-09, with the ex-dividend date set for 2024-03-08. 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 Omnicom Group Inc's dividend performance and assess its sustainability.
What Does Omnicom Group Inc Do?
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Omnicom is a holding company that owns several advertising agencies and related firms. It provides traditional and digital advertising services that include creative design, market research, data analytics, and ad placement. In addition, Omnicom provides outsourced public relations and other communications services. The firm operates globally, providing services in more than 70 countries; it generates more than one half of its revenue in North America and nearly 30% in Europe.
A Glimpse at Omnicom Group Inc's Dividend History
Omnicom Group Inc has maintained a consistent dividend payment record since 1984. Dividends are currently distributed on a quarterly basis.
Omnicom Group Inc has increased its dividend each year since 1994. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 30 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Omnicom Group Inc's Dividend Yield and Growth
As of today, Omnicom Group Inc currently has a 12-month trailing dividend yield of 3.03% and a 12-month forward dividend yield of 3.03%. This suggests an expectation of the same dividend payments over the next 12 months.
Over the past three years, Omnicom Group Inc's annual dividend growth rate was 2.50%. Extended to a five-year horizon, this rate increased to 3.10% per year. And over the past decade, Omnicom Group Inc's annual dividends per share growth rate stands at 5.50%.
Based on Omnicom Group Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Omnicom Group Inc stock as of today is approximately 3.53%.
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 2023-12-31, Omnicom Group Inc's dividend payout ratio is 0.40.
Omnicom Group Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Omnicom Group Inc's profitability 8 out of 10 as of 2023-12-31, 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. Omnicom Group Inc's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Omnicom Group Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Omnicom Group Inc's revenue has increased by approximately 6.20% per year on average, a rate that outperforms approximately 64.44% 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, Omnicom Group Inc's earnings increased by approximately 16.50% per year on average, a rate that outperforms approximately 61.1% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 4.30%, which outperforms approximately 48.18% of global competitors.
Next Steps
Considering Omnicom Group Inc's reliable dividend payment history, its status as a dividend aristocrat, and its consistent dividend growth, investors may find assurance in the company's ability to maintain its dividend payments. The payout ratio of 0.40 indicates a healthy balance between distributing profits to shareholders and retaining earnings for future growth. Coupled with the company's strong profitability and positive growth metrics, Omnicom Group Inc presents an attractive profile for value investors focused on dividend income.
For those seeking investment opportunities with stable and growing dividends, Omnicom Group Inc's track record could be a compelling reason to consider it for their portfolio. However, as with any investment, it's important to review the most recent financial statements and company news to ensure a comprehensive understanding of the current situation. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener to find similar investment opportunities.
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.
