Omnicom Offers Steady Profit Growth, Rising Dividend

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Omnicom Group ( OMC ), the biggest U.S. advertising company, is seeing profits improve as the global economy continues to grow.

The New York City-based firm has reported two straight quarters of accelerating profit increases, to 10% in the latest quarter. Profit for the current quarter is expected to pick up further, rising 11% to 91 cents a share.

Revenue has also been on the upswing, rising 2%, 3%, 3% and 6% in the past four quarters. Sales for the current quarter are again expected to rise 6%, to $3.7 billion.


Omnicom's global ad agencies include BBDO Worldwide, TBWA Worldwide and DDB Worldwide. It also offers public relations services through agencies such as Ketchum and FleishmanHillard.

Omnicom is benefiting from steady growth in Asia, Latin America and the United States, where the company generates most of its revenue.Procter & Gamble ( PG ),McDonald's ( MCD ) andJohnson & Johnson ( JNJ ) are among the ad firm's biggest clients.

The stock cleared a 73.77 buy point of a saucer-with-handle base in heavy volume on July 25, after its better-than-expected quarterly results. However, it quickly pulled back to its 10-week line and is now just below the entry.

Like many large-cap companies, Omnicom's earnings have been remarkably stable. It has a three-year Earnings Stability Factor of 1 on a scale of 0 (most stable) to 99 (most volatile). Profit this year is seen rising 8% to $4.18 a share, followed by an 11% increase in 2015. That's in line with the three-year EPS growth rate of 9%.

Meanwhile, Omnicom has increased its dividend for five straight years after holding the payout steady through the 2008-09 recession. The company in May boosted its quarterly payout by 10 cents, or 25%, to 50 cents a share. The total annual payout of $2.00 a share yields 2.8% at the current share price, well above the S&P 500 average of 1.88%.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: OMC , PG , MCD , JNJ

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