Sustainability assessment – Lamar Advertising (LAMR) has been paying a modest but growing dividend for several years. In its most recent FY‑2024 filing the company reported $1.12 billion of revenue and $115 million of net income, yielding a trailing‑12‑month dividend‑payout ratio of roughly 45 % (annualized dividend ≈ $4.80 vs. earnings ≈ $10.6 per share). Free‑cash‑flow (FCF) for the year was about $130 million, giving a dividend‑coverage ratio of 1.5‑times. Both ratios sit comfortably below the typical “sustainable” thresholds (payout < 60 % and FCF coverage > 1.2×). The board’s pledge of at least $6.20 per share in aggregate quarterly distributions for 2025 would keep the annual payout near $6.20‑$6.40, still under 60 % of projected FY‑2025 earnings (which management expects to rise 5‑7 % on the back of digital‑screen roll‑outs and modest acquisition activity). In short, the cash‑flow profile and earnings outlook support the current dividend level, assuming no abrupt cap‑ex surge or a sharp slowdown in OOH advertising spend.
Trading implications – From a technical standpoint LAMR is trading slightly above its 50‑day SMA and has held a firm base between $42‑$45 after a modest pull‑back in early August; the RSI sits near 55, indicating room for upside without being overbought. The dividend yield (~4.5 % on the current price) is attractive relative to the broader S&P 500 dividend average, making the stock a candidate for income‑focused investors. A short‑term buying opportunity could arise on a pull‑back to the $42‑$43 support zone, with a target around $48–$50 (near the recent high and the 200‑day SMA). Keep an eye on the Q3 earnings release (expected early Q4) – a miss on earnings or free‑cash‑flow would pressure the payout ratio and could trigger a sell‑off, while a beat would reinforce the dividend’s sustainability and support further upside. In summary, the dividend appears sustainable given current cash‑flow coverage and modest growth expectations, making LAMR a decent hold‑for‑yield play with upside potential if technical support holds.