There's a lot more to optimizing your site for the search engines than just on-site / on-page variables (but those are obviously the most important). The sites and pages you choose to link to from a document provide the search engines with important data about the trustworthiness and quality of your own site or page (as well as what you're trying to provide to users and accomplish on your own) and it's generally agreed upon that the "quality" of these outbound links may positively (or negatively) influence rankings..
So what's the best practice for including external links in Web documents?
Link to known authority sites or individual pages of a site which have received some attention from others. For example, if you are selling bicycle tires, then popular website articles about how to fix flats on high end racing bikes would be a good link as long as it's coming from a respected source.
Also, indicate which sites are within your own network. Since search engines assign very little (if any) link value to domains on the same IP, you can be extra careful that external linking does not negatively influence your rankings by using the "rel=nofollow" attribute when linking to sites within your internal network.
Equally important is how you link to other sites. Obviously, don't link to others with a straight URL (https://12335666.edu) but instead by using the secondary terms in line with your primary keyword through the use of anchor text.. Actual anchor text is considered by many to be extremely important. Using our bicycle example, a good external link might look like the following:
Fix a flat bike tire
In short, link to sites whose content you are confident will be of value to those that have visited your page and don't just rely on interlinking your own domains to improve link popularity because as a standalone practice it simply won't work.
Did you miss the other posts in our series on Important SEO Factors - review them now:
SEO Factors: On the Importance of Internal Linking
