American Tower Corp's Dividend Analysis
Understanding the Dividend Profile of a Leading REIT in the Telecommunications Sector
American Tower Corp (NYSE:AMT) recently announced a dividend of $1.7 per share, payable on 2024-02-01, with the ex-dividend date set for 2023-12-27. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into American Tower Corp's dividend performance and assess its sustainability.
What Does American Tower Corp Do?
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American Tower owns and operates more than 220,000 cell towers throughout the U.S., Asia, Latin America, Europe, and Africa. It also owns and/or operates 28 data centers in 10 U.S. markets after acquiring CoreSite. On its towers, the company has a very concentrated customer base, with most revenue in each market being generated by just the top few mobile carriers. The company operates more than 40,000 towers in the U.S., which accounted for roughly half of the company's total revenue in 2022. Outside the U.S., American Tower operates over 75,000 towers in India, almost 50,000 towers in Latin America (dominated by Brazil), 30,000 towers in Europe, and nearly 25,000 towers in Africa. American Tower operates as an REIT.
A Glimpse at American Tower Corp's Dividend History
American Tower Corp has maintained a consistent dividend payment record since 2011, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 2012, earning it the status of a dividend achiever. This honorable designation is reserved for companies that have consistently raised their dividends for at least the past 11 years. Below is a chart illustrating the historical trends of American Tower Corp's annual Dividends Per Share.
Breaking Down American Tower Corp's Dividend Yield and Growth
As of today, American Tower Corp currently has a 12-month trailing dividend yield of 2.93% and a 12-month forward dividend yield of 3.16%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, American Tower Corp's annual dividend growth rate was 15.70%. This rate increased to 17.70% per year over a five-year horizon, and over the past decade, American Tower Corp's annual dividends per share growth rate stands at an impressive 21.00%. Based on American Tower Corp's dividend yield and five-year growth rate, the 5-year yield on cost of American Tower Corp stock as of today is approximately 6.62%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, American Tower Corp's dividend payout ratio is 3.13, which may suggest that the company's dividend may not be sustainable. American Tower Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks American Tower Corp's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
American Tower Corp's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Its revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. American Tower Corp's revenue has increased by approximately 10.80% per year on average, outperforming approximately 82.74% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, American Tower Corp's earnings increased by approximately 11.50% per year on average, outperforming approximately 68.67% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 19.60%, outperforms approximately 86.08% of global competitors.
Next Steps
In conclusion, American Tower Corp's consistent dividend payments, robust dividend growth rate, and a moderate payout ratio, combined with strong profitability and growth metrics, present a compelling case for investors looking for sustainable income. While the payout ratio may raise questions about dividend sustainability, the company's overall financial health and growth prospects suggest that it is well-positioned to maintain its dividend achiever status. As value investors, it's crucial to keep an eye on these factors to ensure that dividend income remains reliable in the long term. Will American Tower Corp continue to be a beacon of stability for dividend-seeking investors? Only time will tell, but the current indicators are promising. For those looking to expand their portfolio with high-dividend yield stocks, GuruFocus Premium users can leverage the High Dividend Yield Screener for informed investment decisions.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
