American Tower Declares Dividend

After starting its operation as a Real Estate Investment trust (REIT) from January 1, 2012, American Tower Corporation ( AMT - Analyst Report ) declared its first dividend of 21 cents per share on March 22, 2012 to be paid on April 25, 2012, to shareholders of record as of the close of business on April 11, 2012.

The company started functioning as REIT after completing the merger with its wholly owned subsidiary American Tower REIT Inc., on December 31, 2011.

Following the conversion, American Tower will be required to pay less tax as the company will distribute 90% of its earnings through dividends every year.

Earlier, the company made a special dividend payment of 35 cents per share to its shareholders on December 23, 2011, in order to qualify as a REIT besides receiving favorable approval from the shareholders of the American Tower business.

We believe that the wireless tower industry will continue to outperform, primarily on the back of huge demand for mobile data and video services. Moreover, Clearwire Corporation ( CLWR - Snapshot Report ) and T-Mobile are planning to roll out LTE networks, which we believe will help the company to extend its customer portfolio, hence driving top-line growth for the company going forward.

However, American Tower holds a highly leveraged balance sheet along with huge margin pressure. As the company continues to expand its network in the emerging nations like India, China and Latin American region, it will remain highly vulnerable to the exchange rate risks. We thus maintain our long-term Neutral recommendation for American Tower Corporation.

Currently, the company has a Zacks #3 Rank, implying a short-term Hold rating.

Boston, Massachusetts-based American Tower Corporation is a leading independent operator of wireless communications towers in the U.S., Brazil, Mexico, India, and Chile. American Tower leases antenna space on its towers to wireless service providers as well as to radio and television broadcast companies.