portable cd with digital out?

Yes, they exist. I have an old, old Sony with a toslink out. Mine dates from the days when even the slightest bump to the unit would create a skip, and would not be suitable for any application in which the player was jostled much during use.

I have used several SONY models with digital output. Sony now uses a miniplug optical connector. Optical cables with miniplug on one end and Toslink on the other are avaialable at Best Buy. Be sure to use several jitter filters such as the Theta TLC or the Monarchy DIP.