Lamar Advertising’s Stable Dividend Policy in a High-Yield Environment

Lamar Advertising Company (LAMR) has long been a cornerstone of the outdoor advertising sector, offering a compelling blend of stable cash flows and a generous dividend yield. As of August 2025, LAMR’s dividend yield stands at 5.4%, significantly outpacing the sector average of 3.8% for Specialized REITs and trailing behind Outfront Media’s eye-catching 6.8% [1][3]. This positions LAMR as a middle-tier option in a sector where high yields often come with elevated risks.

Dividend Sustainability: A Closer Look

While LAMR’s yield is attractive, investors must scrutinize its sustainability. The company’s payout ratio of 137.53% [3] raises red flags, as it exceeds 100%, indicating that dividends are paid out of more than just current earnings. However, this metric must be contextualized. LAMR’s free cash flow (FCF) surged to $754.03 million in 2024, a 23.13% increase from 2023 [1], suggesting that the company generates ample liquidity to support its dividend. This FCF coverage is critical for REITs like LAMR, which are required by law to distribute most of their income to shareholders.

In contrast, Outfront Media (OUT), a key peer, boasts a 11.33% yield but operates with a negative payout ratio (-47.2%), meaning it pays out more in dividends than it earns in net income [1]. This unsustainable model highlights LAMR’s relative prudence. While LAMR’s payout ratio is high, its FCF growth and disciplined capital allocation—evidenced by its $215.31 million in Q1 2025 FCF [1]—suggest the dividend is less vulnerable to cuts.

Shareholder Returns: Dividends vs. Buybacks

LAMR’s shareholder return strategy is heavily weighted toward dividends, with buybacks playing a minor role. The company reported a buyback yield of -0.07% as of August 2025 [2], indicating negligible repurchase activity. This contrasts with Outfront Media, which has prioritized aggressive buybacks to bolster its yield [1]. However, LAMR’s approach aligns with its REIT structure, which mandates high dividend payouts.

The outdoor advertising sector’s average dividend payout ratio is 83.36% [3], meaning most companies operate with a buffer between earnings and distributions. LAMR’s 137.53% ratio appears extreme, but its FCF coverage mitigates concerns. For context, Outfront’s 71% payout ratio [2] is more conservative, yet its negative net income underlines the risks of over-reliance on non-GAAP metrics like AFFO (Adjusted Funds From Operations) [4].

Risk and Reward in a High-Yield Environment

LAMR’s 19.7% net profit margin and 14.19% 10-year annualized return [3] underscore its financial strength, contrasting sharply with Outfront’s -22.49% margin and 3.85% return. This profitability, coupled with 10.85% volatility (lower than Outfront’s 12.91%) [3], positions LAMR as a less risky high-yield option. While its yield is not the sector’s highest, its combination of earnings resilience and FCF growth makes it a durable choice for income-focused investors.

Conclusion

Lamar Advertising’s dividend policy balances generosity with sustainability, leveraging robust FCF and disciplined operations to maintain its 5.4% yield. While its payout ratio is high, the company’s financial metrics—particularly its FCF growth and profitability—provide a safety net absent in peers like Outfront Media. For investors seeking a stable, high-yield REIT with lower volatility, LAMR offers a compelling case, even in a sector where extremes like Outfront’s unsustainable model abound.

**Source:[1] Lamar Advertising Free Cash Flow 2010-2025 | LAMR, https://www.macrotrends.net/stocks/charts/LAMR/lamar-advertising/free-cash-flow[2] Lamar Advertising Company (LAMR) Statistics & Valuation, https://stockanalysis.com/stocks/lamr/statistics/[3] OUTFRONT Media (OUT) Competitors and Alternatives 2025, https://www.marketbeat.com/stocks/NYSE/OUT/competitors-and-alternatives/[4] OUTFRONT Media Reports Fourth Quarter And Full Year 2024 Results, https://investor.outfront.com/news/news-details/2025/OUTFRONT-Media-Reports-Fourth-Quarter-And-Full-Year-2024-Results/default.aspx