Lamar Advertising: An Outdoor Ad REIT Spinning Off Attractive Income, Returns

Image Source: UnsplashLamar Advertising Co. (LAMR) is one of the largest outdoor advertising Real Estate Investing Trusts (REITs) worldwide, with more than 363,000 displays across 45 US states and Canada. Lamar Advertising offers its customers a broad range of advertising mediums, including billboards, digital billboards, interstate logo, transit systems, and airport advertising formats, advises Martin Fridson, editor of Forbes/Fridson Income Securities Investor.The company’s business risk and competitive position are solid, while country risk is very low. However, financial risk and cash flow leverage remain somewhat aggressive. Increased leverage was brought on by the pandemic and the decline in travel, but that has since been reduced. Deleveraging is likely to continue.

Lamar Advertising Co. (LAMR)
Lamar Advertising generates more than 90% of its revenues from billboards in small and midsize US markets. The company reported solid 2Q 2024 revenue growth and adjusted funds from operations (AFFO) of $213.5 million, up almost 10% year-over-year. AFFO per share for the quarterly period was $2.08, topping analysts’ estimates by a penny, while net revenue of $565.3 million grew 4.5%, also ahead of estimates.Free cash flow to debt coverage should increase this year due to the reduction in capital expenditures. As of June 30, Lamar Advertising’s liquidity position was solid, with $744.3 million in total liquidity.Dividend growth from this common stock investment has been solid, with distributions taxed as ordinary income. Lamar Advertising’s common stock is suitable for medium- to high-risk tax-deferred portfolios.My recommended action would be to consider buying shares of Lamar Advertising.

About the Author
Martin Fridson is the publisher of Income Securities Investor and according to Investment Dealers’ Digest, he is “perhaps the most well-known figure in the high-yield world.” He has served as a CFA Institute governor and consultant to the Federal Reserve Board. In 2002 the Financial Management Association International named Mr. Fridson the Financial Executive of the Year. The CFA Society New York gave him its Ben Graham Award in 2017.More By This Author:IOO: An Attractive ETF For A Lower-Rate, Soft-Landing MarketPPG Industries: A Paint And Coatings Giant To Turn To If Markets Get VolatileSeptember is Historically the Market’s Worst Month. Will Things Be Different in ’24?