A Comprehensive Analysis of LAMR's Dividend Performance and Sustainability
Lamar Advertising Co (LAMR, Financial) recently announced a dividend of $1.25 per share, payable on September 29, 2023, with the ex-dividend date set for September 15, 2023. As investors eagerly anticipate this upcoming payment, it's crucial to examine the company's dividend history, yield, and growth rates. Leveraging data from GuruFocus, this article provides a comprehensive analysis of Lamar Advertising Co's dividend performance and its sustainability.
Understanding Lamar Advertising Co's Business Model
Lamar Advertising Co is a leading outdoor advertising firm, structured as a real estate investment trust for U.S. federal income tax purposes. The company's primary revenue source is leasing advertising space on billboards, buses, shelters, benches, logo plates, and airport terminals through short-term agreements. Lamar Advertising Co is involved in the entire advertising process, from ad copy production to the placement and maintenance of physical advertisements. The company primarily earns its revenue from renting ad space on its portfolio of static and digital roadside billboard displays in the U.S., with a significant presence in Pennsylvania and Texas. The majority of its customers are from the restaurant, service, healthcare, and retail sectors.
Exploring Lamar Advertising Co's Dividend History
Since 2014, Lamar Advertising Co has maintained a consistent dividend payment record, with dividends currently distributed on a quarterly basis. The chart below shows the annual Dividends Per Share for tracking historical trends.
Deciphering Lamar Advertising Co's Dividend Yield and Growth
As of today, Lamar Advertising Co boasts a 12-month trailing dividend yield of 5.56% and a 12-month forward dividend yield of 5.68%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, the company's annual dividend growth rate was 7.00%, which decreased to 3.40% per year when extended to a five-year horizon. As of today, the 5-year yield on cost of Lamar Advertising Co stock is approximately 6.57%.
Evaluating Dividend Sustainability: Payout Ratio and Profitability
The sustainability of a dividend is often assessed by examining 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 June 30, 2023, Lamar Advertising Co's dividend payout ratio is 1.20, 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. As of June 30, 2023, GuruFocus ranks Lamar Advertising Co's profitability 9 out of 10, suggesting good profitability prospects. The company has reported positive net income each year over the past decade, further solidifying its high profitability.
Assessing Growth Metrics: The Future Outlook
For a company to sustain its dividends, it must demonstrate robust growth metrics. Lamar Advertising Co's growth rank of 9 out of 10 suggests a promising growth trajectory relative to its competitors. The company's revenue per share and 3-year revenue growth rate indicate a robust revenue model, with an average annual increase of approximately 4.60%, outperforming approximately 65.93% of global competitors.
The company's 3-year EPS growth rate showcases its ability to grow earnings, a critical factor for sustaining dividends in the long run. Over the past three years, Lamar Advertising Co's earnings increased by approximately 5.10% per year on average, outperforming approximately 54.94% of global competitors. The company's 5-year EBITDA growth rate of 4.90% also outperforms approximately 53.45% of global competitors.
Wrapping Up
In conclusion, while Lamar Advertising Co has a commendable track record of consistent dividend payments and growth, the high payout ratio raises questions about the sustainability of its dividends. However, the company's strong profitability and growth metrics suggest a promising future. As always, investors should conduct their due diligence before making any investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
