Omnicom Group (NYSE:OMC) Has Announced A Dividend Of $0.70

Omnicom Group Inc. (NYSE:OMC) has announced that it will pay a dividend of $0.70 per share on the 9th of July. This means that the annual payment will be 3.1% of the current stock price, which is in line with the average for the industry.

See our latest analysis for Omnicom Group

Omnicom Group's Dividend Is Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, Omnicom Group's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 24.7% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 31%, which is in the range that makes us comfortable with the sustainability of the dividend.

Omnicom Group Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was $1.60, compared to the most recent full-year payment of $2.80. This works out to be a compound annual growth rate (CAGR) of approximately 5.8% a year over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

We Could See Omnicom Group's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Omnicom Group has been growing its earnings per share at 5.1% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Omnicom Group's prospects of growing its dividend payments in the future.

We Really Like Omnicom Group's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Omnicom Group that investors should take into consideration. Is Omnicom Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.