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American Tower (AMT) Rewards Investors With 6.1% Dividend Hike

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American Tower Corporation (AMT - Free Report) rewarded its investors with a 6.1% sequential hike in the quarterly dividend on the company’s common stock, increasing it to $1.56 per share from the $1.47 paid out earlier. The raised dividend is scheduled to be paid out on Feb 2 to shareholders of record as of Dec 28, 2022.

Based on the new rate, the annualized dividend rate comes to $6.24 per share, up from the prior annual rate of $5.88. This indicates an annualized yield of roughly 2.94%, considering American Tower’s closing price of $212.25 on Dec 8.

Can American Tower Maintain Its Payout?

AMT has a disciplined capital-allocation strategy and has consistently increased its dividend since 2012. Based on the dividends paid out over the trailing four quarters, the company’s dividend yield is 2.79%.

It has increased its dividend 21 times in the last five years, and the five-year annualized dividend growth rate is 17.67%. This is attractive to income investors and represents a steady income stream. Check American Tower’s dividend history here.

American Tower’s extensive and geographically diversified communication real estate portfolio is expected to significantly benefit from increased capital spending by wireless carriers. Incremental demand from global 4G and 5G deployment efforts, growing wireless penetration and spectrum auctions are likely to push up the spending levels of wireless carriers.

Between 2011 and 2021, AMT’s revenues from the property segment and adjusted EBITDA witnessed a CAGR of 14.2% and 14.1%, respectively. Amid secular growth trends in the wireless industry, the healthy performance is expected to continue in 2022. Management projects property revenues and adjusted EBITDA to increase 14.6% and 10.6%, respectively, at the midpoint.

Also, between 2011 and 2021, American Tower’s consolidated adjusted funds from operations (AFFO) witnessed a CAGR of 15.3%. This healthy trend is expected to continue in 2022, with the consolidated AFFO projected in the range of $4,595-$4,675 million, suggesting midpoint growth of 6.0%. This promises rewards for investors in the upcoming period.

Moreover, American Tower’s current payout ratio is 59%. Looking at the company’s AFFO growth and payout ratio, it is likely to be able to sustain the hiked dividend.

Bottom Line

The abovementioned disbursements demonstrate American Tower’s operational strength and commitment to rewarding its shareholders handsomely. The hike reflects American Tower’s ability to generate solid cash flow growth through its operating platform and high-quality portfolio.

As investors are always on the lookout for companies with a track record of consistent and incremental dividend payouts to bet their money on, solid dividend payouts are arguably the biggest enticements for them.

However, customer concentration is high for American Tower. Also, a hike in the interest rate and stiff competition in its industry for new businesses and asset acquisitions add to its woes.

Shares of this Zacks Rank #4 (Sell) company have declined 3.9% over the past month, wider than the industry's fall of 2.9%.

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You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Dividend Increases

On Dec 5, Alexandria Real Estate Equities, Inc. (ARE - Free Report) announced a 2.5% sequential hike in its fourth-quarter 2022 cash dividend payout. Delighting its shareholders, Alexandria Real Estate Equities will now pay out a dividend of $1.21 per share, up from the $1.18 paid in the third quarter.

The increased dividend will be paid out on Jan 13, 2023 to shareholders on record as of Dec 30, 2022. Check Alexandria’s dividend history here.

On Dec 7, CubeSmart (CUBE - Free Report) announced a 14% increase in its quarterly dividend to 49 cents per share. CubeSmart will pay the increased dividend on Jan 17 to common shareholders of record on Jan 3, 2023. Check CubeSmart’s dividend history here.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.


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