WPP - These High-Yield Dividend Stocks Might Be in Trouble
The numbers don't lie. Advertising agencies have massively underperformed the S&P 500 in the last five years due to structural challenges coming from a fundamental shift in the business. In concert with their structural challenges, their operating metrics have also declined. As such, high dividend yield companies like Omnicom (NYSE: OMC) and Interpublic (NYSE: IPG) are yield traps that are worth avoiding, as are their peers such as the U.K.'s WPP (NYSE: WPP) . Here's why.
The simple fact is that the growth of digital media has challenged the way the advertising industry does business, and the agencies are finding it hard to keep up. Last year marked the first time that digital advertising spending made up more than 50% of total media spending, and industry forecasters say it will be above two-thirds in 2023.
The future of advertising is digital, and traditional advertising agencies are finding it hard to adjust. Image source: Getty Images.
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These High-Yield Dividend Stocks Might Be in Trouble