Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and, of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Based in New York, Outfront Media (OUT) is in the Finance sector, and so far this year, shares have seen a price change of 20.17%. The billboard, transit and digital display advertising company is currently shelling out a dividend of $0.33 per share, with a dividend yield of 4.56%. This compares to the REIT and Equity Trust - Other industry's yield of 4.06% and the S&P 500's yield of 1.35%.
Looking at dividend growth, the company's current annualized dividend of $1.32 is up 10% from last year. Over the last 5 years, Outfront Media has increased its dividend 1 times on a year-over-year basis for an average annual increase of 19.37%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Outfront Media's current payout ratio is 52%, meaning it paid out 52% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for OUT for this fiscal year. The Zacks Consensus Estimate for 2026 is $2.32 per share, which represents a year-over-year growth rate of 16.58%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that OUT is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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OUTFRONT Media Inc. (OUT): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).