Understanding the Dividend Dynamics of American Tower Corp
American Tower Corp (AMT, Financial) recently announced a dividend of $1.62 per share, payable on 2024-04-26, with the ex-dividend date set for 2024-04-11. 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?
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 almost half of the company's total revenue in 2023. 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. Dividends are currently distributed on a quarterly basis.
American Tower Corp has increased its dividend each year since 2012. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 12 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
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 3.33% and a 12-month forward dividend yield of 3.34%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, American Tower Corp's annual dividend growth rate was 12.50%. Extended to a five-year horizon, this rate increased to 15.50% per year. And over the past decade, American Tower Corp's annual dividends per share growth rate stands at an impressive 19.50%.
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 6.84%.
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 2023-12-31, American Tower Corp's dividend payout ratio is 1.37, 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 9 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. American Tower Corp's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and American Tower Corp's 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 9.80% per year on average, a rate that outperforms approximately 75.26% 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 2.50% per year on average, a rate that outperforms approximately 46.14% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 5.40%, which outperforms approximately 62.43% of global competitors.
Next Steps
Considering American Tower Corp's consistent dividend payments, robust dividend growth rate, challenging payout ratio, strong profitability, and solid growth metrics, value investors should weigh these factors when considering the stock for their portfolios. The balance between yield and growth, coupled with the company's financial health, suggests that American Tower Corp remains an attractive option for those seeking steady income with the potential for capital appreciation. However, the payout ratio warrants monitoring, as it may indicate the need for future adjustments to maintain dividend sustainability. With the telecommunications infrastructure sector poised to expand, American Tower Corp's strategic position could further bolster its dividend prospects. Will American Tower Corp continue to scale new heights in dividend growth, or will adjustments be necessary to maintain its impressive track record?
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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.
