Face it, advertising is all around us. Whether we’re zoned in on a screen, large or small, hit the road or even inside a public bathroom advertising messages are constantly bombarding us. With so many companies and organizations trying desperately to get their message across it’s no wonder that the advertising space is huge. But have you ever considered the advertising agencies that are responsible for creating these ads and other public relations and marketing services? While a relatively large market exists for these communication entities, from a dividend perspective there are very few companies that are public let along pay a dividend within this space. With that being said, let us take a look at some of these unique dividend players that I have yet to see in any dividend growth portfolio.
First up, is The Interpublic Group of Companies, Inc. (IPG). Founded in 1902 and headquartered in New York, NY, IPG provides advertising and marketing services globally ranging from consumer advertising and digital marketing to public relations and event productions. Currently yielding 2.52% with a moderate payout ratio of 45.8% this dividend appears to be quite safe with room for future growth based on current cash flow. The streak for dividend raises is short for this stock going back only a few years but seems to be on its way to securing future raises. From a valuation perspective, IPG has a current PE of 21.4 which is slightly above its five year average of 18.2. Forward PE looks a lot more attractive at 15.5.
Next among the dividend paying advertising agencies is Omnicom Group Inc. (OMC). Like IPG, OMC is based in NewYork, NY and offers its services worldwide including brand consultancy, content marketing, crisis communication, database management, direct marketing, entertainment marketing, media planning and buying, mobile marketing, multi-cultural marketing, non-profit marketing, package design, product placement, reputation consulting, retail marketing, search engine marketing, social media marketing, and sports and event marketing services. With a current yield of 2.37% and a moderately low payout ratio of just 41.9% the dividend also appears to be safe with plenty of room for future growth. Speaking of growth, OMC has an impressive ten year annualized dividend growth rate of 16.09%. The stock currently sports a PE of 18.6 which is above its five year average of 16.3. Forward PE stands at 16.2 suggesting you might want to wait before pulling the trigger on this name even though both names are trading around the S&P averages.
I’ll briefly mention for those looking into the REIT space, you might want to consider Lamar Advertising Co. (LAMR). While not an advertising agency this company does offer a generous yield of 4.74% selling advertising space on billboards, buses, shelters, benches and more. There’s little doubt that none of us haven’t encountered a Lamar product at some point in our lives.
Clearly, the choices are slim, yet interesting, if you are considering adding some additional diversification to your portfolio in a very well utilized but often missed sector. Advertising agencies and advertising in general will not go away any time soon as businesses and organizations are on the constant lookout to continually push their own products.
Have you ever considered any stocks in the advertising agency space? Please let me know below.
Disclosure: Long NONE