Acquisition LAMR

This one has been on my radar for quite some time. Whenever I drive somewhere I would constantly see their billboards and wonder what a beautifully passive business this is. From understanding perspective, their business model and how they make money can be explained to a child and understood by most individuals. Thus I always wanted to own a part of it and would check constantly if the price is at reasonable levels for me to possible buy into it. Well, I’ve waited and waited and my patience has been rewarded as the price had a nice dip here to 2016 price levels. Now, every time I drive past one of their billboards it gives me warm and fluffy feel good feeling that I am part owner of this great real estate advertising behemoth and that my portion of profits is in route.

Company Overview: 

Lamar Advertising Company was founded in 1902 and is headquartered in Baton Rouge, Louisiana. Essentially, the company is a real estate investment trust that primarily engages in outdoor advertising space on billboards, buses, shelters, benches, and logo plates. It is currently one of the largest outdoor advertising companies in the world, with more than 330,000 displays across the United States, Canada and Puerto Rico.

Statistics:

  • Dividend Yield: 5.1%
  • 3Yr Dividend Growth Rate: N/A
  • Payout Ratio: 103.2%
  • P/E: 20.9
  • Consecutive Years of Dividend Raises: 1
  • Dividend Payout: Quarterly

I purchased 32 shares of Lamar Advertising Co. (LAMR) for the price of $64.80 per share for a total investment of $2,073.60 adding around $106.24 to my annual dividend income.

This is the 7th time I am initiating a stock acquisition this year. This transaction is my first ever purchase of LAMR shares into the portfolio. Currently, LAMR ownership stake represents to be around 1.9% of my current portfolio value. Also, the acquisition of LAMR makes it the 40th company I am invested in.

Conclusion:

The Portfolio “The Dividend Machine” has been updated with link > here.

Thank you for reading & have a great day!

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5 Comments

  1. dividendgeek on September 17, 2017 at 10:20

    Hola DV, I don’t want to sound pessimistic … I am not sure about the sustainability based on payout ratio. Considering their high yield … could this be a stock keeping people interested by paying out higher dividends?

    • DividendVet on September 17, 2017 at 12:46

      I think that there is more than meets the eye for this special exception. As much as I always push for low payout ratios for all my investments, LAMR has always had high payout ratio ranging between 90% to 99% in the previous history. The basis for this is that LAMR business model is quite passive and doesn’t take much reinvesting or maintenance once the advertising is set up. It is set it and forget it type of deal until there is another company banner to switch to. Additionally, in March company raised the dividend so I don’t think there is any worries regarding the safety of the dividend. Lastly, lets not forget that this company is a REIT and by law REITs have to payout at least 90% of their profits to the shareholders in order to receive hefty tax incentives. That is my justification, thought I would love to hear other perspectives as well.

      Good question!

      • dividendgeek on September 17, 2017 at 17:01

        Makes sense. Thanks for the detailed explanation. Seems like a good buy.

  2. Dividend Diplomats on September 24, 2017 at 20:55

    Like the last commentor, I was concerned with the 100%+ payout ratio. It still seems like future dividend growth will be difficult if their current dividend exceeds their EPS. But if they have historically maintained a high payout ratio, then they are used to this. But I will tell you what, you are going to love it every time you drive past one of those signs!

    Bert

    • DividendVet on September 25, 2017 at 20:15

      We will see what future brings, but for the time being I sure do love driving past those signs. 🙂

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