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American Tower Corp's Dividend Analysis

Exploring the Sustainability and Growth of AMT's Dividends

American Tower Corp (NYSE:AMT) recently announced a dividend of $1.62 per share, payable on 2024-07-12, with the ex-dividend date set for 2024-06-14. 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 Corps 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 US, Asia, Latin America, Europe, and Africa. It also owns and/or operates 28 data centers in 10 US 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 US, which accounted for almost half of the company's total revenue in 2023. Outside the US, 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.

American Tower Corp's Dividend Analysis
American Tower Corp's Dividend Analysis

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. Below is a chart showing annual Dividends Per Share for tracking historical trends.

American Tower Corp's Dividend Analysis
American Tower Corp's Dividend Analysis

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 3.34% and a 12-month forward dividend yield of 3.32%. This suggests an expectation of stable dividend payments over the next 12 months. Over the past three years, American Tower Corp's annual dividend growth rate was 1.60%. Extended to a five-year horizon, this rate increased to 10.60% per year. And over the past decade, American Tower Corp's annual dividends per share growth rate stands at an impressive 17.80%.

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 5.53%.

American Tower Corp's Dividend Analysis
American Tower Corp's Dividend Analysis

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 2024-03-31, American Tower Corp's dividend payout ratio is 0.82, suggesting careful management of dividend distributions relative to earnings.

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 2024-03-31, 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

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 strong 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 72.45% 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 42.29% of global competitors.

Lastly, the company's 5-year EBITDA growth rate of 5.40%, which outperforms approximately 62.82% of global competitors.

Conclusion: Assessing Dividend Sustainability and Growth Prospects

In conclusion, American Tower Corp's consistent dividend payments, combined with a robust growth profile and sound financial health, suggest a promising outlook for dividend sustainability and growth. The company's strategic management of its extensive global infrastructure and careful financial practices provide a solid foundation for future success. Investors considering American Tower Corp for its dividend prospects have several positive indicators, but as always, should continue to monitor the company's financial health and market conditions closely.

GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.

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.