Omnicom Group's (NYSE:OMC) Dividend Will Be $0.70

The board of Omnicom Group Inc. (NYSE:OMC) has announced that it will pay a dividend of $0.70 per share on the 12th of October. This makes the dividend yield 3.5%, which will augment investor returns quite nicely.

See our latest analysis for Omnicom Group

Omnicom Group's Earnings Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained. The last dividend was quite easily covered by Omnicom Group's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

The next year is set to see EPS grow by 19.9%. If the dividend continues along recent trends, we estimate the payout ratio will be 35%, 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 2013, the dividend has gone from $1.20 total annually to $2.80. This works out to be a compound annual growth rate (CAGR) of approximately 8.8% 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

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Omnicom Group has impressed us by growing EPS at 7.1% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

Omnicom Group Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Omnicom Group might even raise payments in the future. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, Omnicom Group has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about. Is Omnicom Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.