Recommend DAC with optical outputs

DACs are "Digital to Analog Converters". Outputting a digital signal is not possible. You mean a DAC with optical input?

Toslink is often referred to as Optical... Toslink out?

Larry, I stand corrected.Yes,input.

Centrance Dac Mini. Audiophile DAC w/ Optical, USB and Co-ax digital inputs. Also has a nice Class A headphone amp.

I can't think of any better DAC around $1000 than the Eastern Electric DAC Plus. It's also a small in size unit. Throw the Dexa discrete op-amps in there and you have a DAC that can compete at a MUCH higher price point.

I think most DACs have optical input. At or below your price point, Schiit Bifrost, Wyred for Sound DAC1, both of these have reputedly great USB implenmentations. Above your price point, the Benchmark DAC1 USB also has a great rep for USB (and the pre-amp output). Most other DACs at or below your price point do not have decent USB implementation, or so I've read. I bought a PS Audio DLIII because I knew I'd prefer the warmth it's supposed to have, and it's supposed to handle low frequencies quite well. I haven't been disappointed, but I had to buy a USB/SPDIF converter to get the USB sound quality up to the same level as that coming from my Denon transport.
At your price point I'd definitely give the WYred for SOund DAC1 a try. It would have been my choice if I'd had the dough. Other choices: Peachtree DACit (wall wort), the Rega DAC, the Arcam unit, Music Hall 25.2 or 25.3, MHDT Havana, Cambridge Audio DAC magic (wall wort), cheapest option with the best reviews would be the Emotiva XDA-1. Music Hall also has a DAC 15.2 that I heard at RMAF and liked. Your options are wide open with optical as the input, everyone's got it.

Realremo,Vapor1 and 4hannons,thank you for your recommendations.I'll begin the research.