Seeking high-yield dividends often leads investors to the real estate sector, particularly real estate investment trusts (REITs), known for their hefty dividends mandated by law.
Opportune times lie ahead for dividend seekers eyeing REITs; prices have dipped amidst rising interest rates. However, the Federal Reserve forecasts a reversal, hinting at declining rates later this year, likely steering investors back towards dividend-rich stocks like REITs, fostering a rise in their market values.
Top choices in the REIT space span office, residential, industrial, retail, and healthcare sectors, each offering distinct advantages. Among these, standout Outfront Media (NYSE: OUT), a major owner of outdoor advertising properties encompassing both digital and traditional billboards, stands tall.
Showing a robust dividend yield of 7.6% and nearly doubling in recent months, Outfront is primed for growth, backed by an industry secret worth uncovering.
Image source: Getty Images.
An Updraft in the Wind
Outfront, like other REITs, is riding high on falling interest rate expectations since the market upswing from October.
Beyond rate benefits, Outfront profits from a tailwind stemming from a resurgent advertising market, known for its cyclical nature. With advertisers amping up spend post-anticipated recession years and consumer wallets staying open, ad demand is back on the rise.
Despite mild fourth-quarter growth of 1.3%, influenced by hitches in its transit segment, Outfront’s billboard division shines with increased rates, hinting at widening margins ahead.
With a projected high single-digit rise in adjusted funds from operations in 2024 from the $271 million reported in 2023, Outfront’s crowning glory is its evolving digital venture in the shift towards digital billboards in outdoor advertising.
Unmasking Outfront’s $23 Billion Treasure Trove
Outfront’s digital revenue soared 8.9% in the last quarter, totaling $179.5 million and contributing 35.8% to its income. However, the digital out-of-home (DOOH) advertising’s goldmine is far bigger, slated to reach $48.9 billion by 2029 from $23.2 billion in 2022, growing by 11.2% annually.
Positioned uniquely to capitalize on this bonanza, Outfront gains from advancements like programmatic advertising in its DOOH properties, lifting ad rates and value for its clients, evident through recent collaborations with industry giants like The Trade Desk, Freshpet, and the NBA.
With a strong foothold in the DOOH market’s double-digit growth, combined with falling interest rates and a resurging ad arena, Outfront promises a fruitful journey ahead for investors eyeing the tantalizing 7.6% dividend yield.
Considering a $1,000 plunge into Outfront Media?
Before diving in, here’s a tidbit to chew on:
The Motley Fool Stock Advisor snubbed Outfront Media among its 10 best stock picks, each touted to reap substantial returns. This iconic service offers a recipe for investment success through expert insights, regular analyst updates, and bi-monthly stock gems, surpassing S&P 500 returns since 2002.*
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Jeremy Bowman holds stakes in The Trade Desk. The Motley Fool is backing Freshpet and The Trade Desk, and recommending Outfront Media. It operates under a disclosure policy.
The expressed opinions are solely the author’s and do not necessarily align with Nasdaq, Inc.’s viewpoints.
