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American Tower (AMT) Hikes Dividend by 3.2%: Is It Sustainable?
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Delighting its shareholders, American Tower Corporation (AMT - Free Report) announced a 3.2% hike in its quarterly dividend on the company’s common stock to $1.62 per share from $1.57 paid out earlier. The raised dividend is scheduled to be paid out on Oct 27 to shareholders of record as of Oct 11, 2023.
Based on the new rate, the annualized dividend rate comes to $6.48 per share, up from the prior annual rate of $6.28. This indicates an annualized yield of roughly 3.65%, considering American Tower’s closing price of $177.41 on Sep 21.
AMT has increased its dividend 19 times in the last five years, and the five-year annualized dividend growth rate is 16.02%. 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 2012 and 2022, American Tower’s revenues from the property segment and adjusted EBITDA grew at CAGRs of 14.1% and 13.4%, respectively. Despite a challenging macroeconomic environment in the current year, management projects property revenues and adjusted EBITDA of 3.9% and 5.2%, respectively, at the midpoint.
Further, backed by robust operating fundamentals, between 2012 and 2022, American Tower’s consolidated adjusted FFO (AFFO) witnessed a CAGR of 12.4%. While we expect consolidated AFFO growth to moderate in 2023, we anticipate the same to improve 7.1% year over year in 2024.
Moreover, American Tower’s current payout ratio is 65%. Looking at the company’s AFFO growth and payout ratio, AMT is likely to be able to sustain the hiked dividend.
Wrapping Up
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 high interest rate and stiff competition in its industry for new businesses and asset acquisitions add to its woes.
Shares of this Zacks Rank #3 (Hold) company have risen 1% over the past month, slightly lower than the industry's increase of 1.2%.
The Zacks Consensus Estimate for Welltower’s 2023 FFO per share has been raised marginally over the past month to $3.54.
The Zacks Consensus Estimate for SBA Communications’ current-year FFO per share has moved marginally northward over the past month to $12.90.
The Zacks Consensus Estimate for Americold Realty Trust’s ongoing year’s FFO per share has been raised 1.6% upward over the past month to $1.26.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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American Tower (AMT) Hikes Dividend by 3.2%: Is It Sustainable?
Delighting its shareholders, American Tower Corporation (AMT - Free Report) announced a 3.2% hike in its quarterly dividend on the company’s common stock to $1.62 per share from $1.57 paid out earlier. The raised dividend is scheduled to be paid out on Oct 27 to shareholders of record as of Oct 11, 2023.
Based on the new rate, the annualized dividend rate comes to $6.48 per share, up from the prior annual rate of $6.28. This indicates an annualized yield of roughly 3.65%, considering American Tower’s closing price of $177.41 on Sep 21.
AMT has increased its dividend 19 times in the last five years, and the five-year annualized dividend growth rate is 16.02%. 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 2012 and 2022, American Tower’s revenues from the property segment and adjusted EBITDA grew at CAGRs of 14.1% and 13.4%, respectively. Despite a challenging macroeconomic environment in the current year, management projects property revenues and adjusted EBITDA of 3.9% and 5.2%, respectively, at the midpoint.
Further, backed by robust operating fundamentals, between 2012 and 2022, American Tower’s consolidated adjusted FFO (AFFO) witnessed a CAGR of 12.4%. While we expect consolidated AFFO growth to moderate in 2023, we anticipate the same to improve 7.1% year over year in 2024.
Moreover, American Tower’s current payout ratio is 65%. Looking at the company’s AFFO growth and payout ratio, AMT is likely to be able to sustain the hiked dividend.
Wrapping Up
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 high interest rate and stiff competition in its industry for new businesses and asset acquisitions add to its woes.
Shares of this Zacks Rank #3 (Hold) company have risen 1% over the past month, slightly lower than the industry's increase of 1.2%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are Welltower (WELL - Free Report) , SBA Communications (SBAC - Free Report) and Americold Realty Trust (COLD - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Welltower’s 2023 FFO per share has been raised marginally over the past month to $3.54.
The Zacks Consensus Estimate for SBA Communications’ current-year FFO per share has moved marginally northward over the past month to $12.90.
The Zacks Consensus Estimate for Americold Realty Trust’s ongoing year’s FFO per share has been raised 1.6% upward over the past month to $1.26.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.