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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.