- Oops!Something went wrong.Please try again later.
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
American Tower in Focus
American Tower (AMT) is headquartered in Boston, and is in the Finance sector. The stock has seen a price change of 16.76% since the start of the year. Currently paying a dividend of $1.31 per share, the company has a dividend yield of 2%. In comparison, the REIT and Equity Trust - Other industry's yield is 3.07%, while the S&P 500's yield is 1.4%.
Looking at dividend growth, the company's current annualized dividend of $5.24 is up 15.7% from last year. Over the last 5 years, American Tower has increased its dividend 5 times on a year-over-year basis for an average annual increase of 19.51%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. American Tower's current payout ratio is 55%. This means it paid out 55% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, AMT expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $9.57 per share, representing a year-over-year earnings growth rate of 13.39%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, AMT is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
American Tower Corporation (AMT) : Free Stock Analysis Report
To read this article on Zacks.com click here.