High-yield dividend stocks are often found in real estate, particularly REITs. REITs pay high dividend yields because they must distribute 90% of their profits as dividends by law.
Dividend investors should take advantage of REIT share prices falling when interest rates rise. According to the Federal Reserve, interest rates could fall later this year, encouraging investors to buy dividend companies like REITs and raising their share values.
REIT investors can choose from office, residential, industrial, retail, and healthcare, each with their own benefits. Outfront Media (NYSE: OUT), a major owner of outdoor advertising properties like digital and analog billboards, is a niche REIT investment with a high yield.
The stock has nearly doubled since October and pays 7.6% dividends. Outfront will also profit from an industry secret weapon, but first, let's look at why the stock should keep rising. After the stock market rallied in October, Outfront and other REITs benefited from falling interest rates.
Outfront is also benefiting from a cyclical advertising market comeback and reducing interest rates. As consumer spending rises, advertisers are increasing ad spending after cutting down in 2022 and 2023 to prepare for a recession that never came. Headwinds in its transit division slowed Outfront's fourth-quarter revenue growth to 1.3%. However, management noted that increasing billboard demand is raising prices and should boost profitability.
In 2024, the company forecasts adjusted funds from operations to rise by high single digits from $271 million in 2023. As outdoor advertising shifts to digital billboards, its digital business might boost the stock.
Opportunity for Outfront: $23 billion Digital revenue climbed 8.9% to $179.5 million in the quarter, accounting for 35.8% of Outfront's overall income, while DOOH advertising is far larger and increasing faster. One estimate puts the DOOH market at $23.2 billion in 2022 and growing 11.2% year through 2029 to $48.9 billion.
Programmatic advertising adds value to Outfront's DOOH properties and raises advertising rates, making it well-positioned to take advantage of that opportunity.
The business announced a major expansion of programmatic advertising in NYC's transportation system on Tuesday. Outfront features digitally programmable signs in virtually every subway station, 3,800, allowing marketers to adjust adverts based on time and place. Outfront partners with The Trade Desk, Freshpet, and the NBA.
If Outfront can capitalize on double-digit DOOH growth, falling interest rates, and a rebounding advertising market, the company might be a winner in the future years. Buy the company today to benefit from its 7.6% dividend yield.
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