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Omnicom (OMC) Hikes Quarterly Dividend, Payable in July

Zacks Equity Research
Updated

Global marketing and corporate communications company Omnicom Group Inc. OMC hiked its quarterly dividend payout by 10% year over year to 55 cents per share or $2.20 on an annualized basis. The dividend is payable on Jul 11, 2016 to shareholders on record as of Jun 13.

Based on the closing price of $82.88 on May 24, 2016, the dividend affirms a yield of 2.7%. A steady dividend payout and share repurchases facilitate the long-term strategy of Omnicom to provide attractive risk-adjusted returns to its stockholders. In addition, decent dividend increases at periodic intervals have been the company’s key features.

Omnicom has repurchased shares worth $193.2 million during the first quarter of 2016, under its share buyback program. From 2006 through Mar 31, 2016, Omnicom distributed over 110% of net income to shareholders through dividends and share repurchases.

As the second biggest global advertising and marketing service agency group, Omnicom has an extensive geographic footprint, high client retention, along with a huge and diverse customer base. Despite a slack in global economic growth, Omnicom is expected to grow at a moderate pace in 2016. In addition, robust free cash flow generation and an undrawn balance of $2.5 billion under its credit facility provide adequate liquidity to the company to successfully raise its dividend and reward the shareholders with healthy returns.

Omnicom is experiencing continuous revenue growth, driven by healthy performance in developed markets like the U.S. and developing markets like Asia. The stringent cost reduction initiatives have also helped to boost earnings. The company is expanding its global footprint and is moving into new service areas. It is also building upon its digital and analytical capabilities by investing in agencies and partnering with innovative technology companies in key markets. Omnicom’s operations are diversified across technology platforms, thus lowering its dependence on any single product.

Omnicom currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Sizmek Inc. SZMK and Publicis Groupe SA PUBGY, both carrying a Zacks Rank #2 (Buy), and WPP plc WPPGY sporting a Zacks Rank #1 (Strong Buy).

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OMNICOM GRP (OMC): Free Stock Analysis Report
 
WPP PLC (WPPGY): Free Stock Analysis Report
 
PUBLICIS GP-ADR (PUBGY): Free Stock Analysis Report
 
SIZMEK INC (SZMK): Free Stock Analysis Report
 
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