Dissecting the Dividend History, Growth, and Yield of Omnicom Group Inc (OMC, Financial)
Omnicom Group Inc (OMC) recently announced a dividend of $0.7 per share, payable on 2023-10-12, with the ex-dividend date set for 2023-09-20. 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 deep dive into Omnicom Group Inc's dividend performance and assess its sustainability.
About Omnicom Group Inc
Omnicom is the world's second-largest ad holding company, based on annual revenue. The firm's services, which include traditional and digital advertising and public relations, are provided worldwide, with over 80% of its revenue coming from more developed regions such as North America and Europe.
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 29 years.
Omnicom Group Inc's Dividend Yield and Growth
As of today, Omnicom Group Inc currently has a 12-month trailing dividend yield of 3.67% and a 12-month forward dividend yield of 3.67%. This suggests an expectation of 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 4.60% per year. And over the past decade, Omnicom Group Inc's annual dividends per share growth rate stands at 7.60%.
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 4.60%.
Assessing Dividend Sustainability: 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 2023-06-30, Omnicom Group Inc's dividend payout ratio is 0.41.
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 7 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Looking Ahead: Growth Metrics and Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Omnicom Group Inc's growth rank of 7 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 0.70% per year on average, a rate that outperforms than approximately 51.88% 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 1.60% per year on average, a rate that outperforms than approximately 46.29% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 4.60%, which outperforms than approximately 51.27% of global competitors.
Conclusion
In conclusion, Omnicom Group Inc has demonstrated a consistent dividend payment history, a moderate growth rate, and a reasonable payout ratio, all of which indicate a sustainable dividend. Its profitability and growth metrics further underscore its ability to maintain its dividends in the long run. While future market conditions and company performance will ultimately influence the sustainability of dividends, the current indicators point towards a promising dividend outlook for Omnicom Group Inc.
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