American Tower Corporation AMT rewarded its investors with a 2.8% sequential hike in the quarterly dividend on the company’s common stock, increasing it to $1.47 per share from the $1.43 paid out earlier. The raised dividend is scheduled to be paid out on Oct 26 to shareholders of record as of Oct 11, 2022.
Based on the new rate, the annualized dividend rate comes to $5.88 per share, up from the prior annual rate of $5.72. This indicates an annualized yield of roughly 2.53%, considering American Tower’s closing price of $232.78 on Sep 22.
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, AMT’s dividend yield is 2.44%.
It has increased its dividend 21 times in the last five years, and the five-year annualized dividend growth rate is 18.39%. 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 these players.
AMT is strengthening its tower portfolio and data center assets through acquisitions. Recently, American Tower signed a long-term lease deal with Verizon Communications Inc. VZ. With this, Verizon has secured access to American Tower’s extensive portfolio of communications sites in the United States to deploy its nationwide 5G network.
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 13.8% and 10.1%, 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 also expected to continue in 2022, with the consolidated AFFO projected in the range of $4,455-$4,565 million, suggesting midpoint growth of 5.5%. This promises rewards for investors in the upcoming period.
Moreover, American Tower’s current payout ratio is 58%%, lower than the industry average of 59.67%. Looking at the company’s AFFO growth and payout ratio, it is likely to be able to sustain the hiked dividend.
Such 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.
Shares of this Zacks Rank #3 (Hold) company have declined 1.2% over the past six months, narrower than the industry's fall of 18%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Recent Dividend Increases
On Sep 13, Realty Income Corporation O announced its 117th common stock monthly dividend hike since the company’s NYSE listing in 1994. Delighting its shareholders, the company will now pay out 24.80 cents per share in the dividend compared with 24.75 cents paid out earlier.
The increased dividend will be paid out by Realty Income on Oct 14 to shareholders on record as of Oct 3, 2022. Check Realty Income’s dividend history here.
On Sep 15, Innovative Industrial Properties, Inc. IIPR announced a 2.9% hike in its third-quarter dividend to $1.80 per share from $1.75 paid out in the prior quarter. The new dividend will be paid out by Innovative Industrial Properties on Oct 14 to shareholders of record on Sep 30, 2022. Check Innovative Industrial Properties’ 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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