Delighting its shareholders, American Tower Corporation AMT announced a 4.9% hike in its quarterly dividend on the company’s common stock to $1.70 per share from $1.62 paid out earlier. The raised dividend is scheduled to be paid out on April 28 to shareholders of record as of April 11, 2025.

Based on the new rate, the annualized dividend rate comes to $6.80 per share, up from the prior annual rate of $6.48. This indicates an annualized yield of roughly 3.29%, considering American Tower’s closing price of $206.93 on March 6.

Solid dividend payouts are arguably the biggest enticements for REIT shareholders, and AMT had recently hinted about its plan to resume dividend growth at mid-single-digit rates in 2025 after focusing on deleveraging in prior years. In 2024, amid the setbacks that impacted its growth rate, this tower REIT had paused its dividend hikes for the year. AMT had faced significant headwinds in India and Latin America, affecting its growth prospects in these regions.

Is AMT’s Dividend Sustainable?

AMT's core tower business is benefiting from favorable industry trends. As mobile carriers push forward with their 5G network expansions, demand for AMT’s infrastructure has risen. In the fourth quarter of 2024, the company reported solid year-over-year organic tenant billings growth of 5%, with total tenant billings increasing 5.7%.

In the fourth quarter, data centers contributed $236 million to property revenues, reflecting a 9.8% increase year over year. Leveraging the growing demand for cloud computing and AI applications, the company plans to invest more than $600 million in expanding its data center portfolio in 2025. These investments are projected to yield stabilized returns in the mid-teens. Additionally, the company’s strategic move to exit operations in high-risk regions appears to be a positive step.

Beyond its strong operating platform, American Tower maintains ample liquidity to meet its debt obligations. Steady adjusted EBITDA margins, consistent revenue growth, and solid returns on invested capital highlight the resilience of its core business and reinforce its capacity to manage near-term liabilities. As of Dec. 31, 2024, the company held $12 billion in total liquidity. Additionally, it remains on track with its net leverage target of 5x EBITDA, having reduced floating-rate debt to just 3%. The company also benefits from a weighted average debt maturity of 5.7 years.

Therefore, with a solid operating model and healthy financial position, the company remains well-poised to respond to challenges and bank on growth opportunities. Also, we expect the latest dividend rate to be sustainable.

Wrapping Up on AMT

AMT's long-term growth prospects remain strong. The company is well-positioned to capitalize on robust demand for its communications infrastructure, as U.S. and European carriers deploy mid-band spectrum and emerging market operators enhance 4G networks and expand 5G coverage. Additionally, rising demand for AI and cloud computing is expected to drive further revenue growth in its data center segment. Its strategic exit from India and South African fiber, along with other non-core assets, should also enhance earnings quality and overall financial performance.

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, near-term headwinds from Sprint churn and FX volatility remain concerns. Also, interest rate headwinds are likely to continue in the current year.

Shares of this Zacks Rank #3 (Hold) company have risen 12.8% so far this year, well ahead of the industry's growth of 4.8%.

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Stocks to Consider

Some better-ranked stocks from the broader REIT sector are Gladstone Land LAND and Sabra Healthcare REIT SBRA, each carrying a Zacks Rank of #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Gladstone’s 2025 FFO per share is pegged at 54 cents, which indicates year-over-year growth of 14.9%.

The Zacks Consensus Estimate for Sabra’s full-year FFO per share is $1.49, which indicates an increase of 3.5% from the year-ago period.

Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

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