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Shares of American Tower AMT have rallied 16.2% so far in the year, outperforming the REIT and equity trust industry's growth of 5.1%. Delighting its shareholders, this tower REIT recently 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.
Moreover, in the last week of February, this tower REIT came up with its fourth-quarter and full-year 2024 results, showcasing steady growth in its core tower leasing business despite facing headwinds from unfavorable foreign exchange impacts and churn.
AMT continues to expand its data center investments, committing $600 million to strengthen its digital infrastructure. AMT also focuses on capital in high-growth markets. Around 80% of its discretionary spend ($1.5 billion) in 2025 will target developed markets (the United States, Canada and Europe), while discretionary spending in emerging markets will be reduced by 60% compared to the 2021 levels and more than 15% compared to the prior year. This shift aims to improve earnings quality and reduce exposure to foreign exchange volatility.
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Factors Behind AMT Stock's Price Surge: Will the Trend Last?
AMT reported fourth-quarter 2024 AFFO per share of $2.32, slightly missing the Zacks Consensus Estimate by a cent but reflecting a 1.3% year-over-year increase. Meanwhile, total revenues for the quarter reached $2.55 billion, surpassing the Zacks Consensus Estimate of $2.50 billion and marking a 3.7% rise from the same period last year.
AMT’s core tower operations are benefiting from favorable market conditions. As mobile carriers advance their 5G network expansions, demand for AMT’s infrastructure has risen. The company reported solid year-over-year organic tenant billings growth of 5%, with total tenant billings increasing by 5.7%. AMT’s top three customers in terms of consolidated operating revenues for 2024 are T-Mobile TMUS (19%), AT&T T (18%) and Verizon Wireless VZ (13%).
Furthermore, Data Centers contributed $236 million to Property revenues in the fourth quarter, reflecting a 9.8% increase year over year. Leveraging growing demand for cloud computing and AI applications, the company intends to invest more than $600 million to expand its data center footprint in 2025. These investments are projected to deliver stabilized yields in the mid-teens. Additionally, the company’s strategic move to exit operations in high-risk regions appears to be a positive step.
In addition to its strong operating platform, American Tower maintains strong liquidity to comfortably meet its debt obligations. As of Dec. 31, 2024, the company had $12 billion in total liquidity. It also remains on track to achieve its net leverage target of 5X EBITDA, with floating-rate debt reduced to just 3%.
Solid dividend payouts are arguably the biggest enticements for REIT shareholders, and AMT, prior to the recent hike of 4.9% in its quarterly dividend, had hinted about its plan to resume dividend growth at mid-single-digit rates in 2025 after focusing on deleveraging in prior years. In the last five years, AMT has increased its dividend 16 times, and the annualized dividend growth rate for this period is 10.46%. Moreover, it has a lower dividend payout compared with its industry. Such disbursements highlight its operational strength and commitment to rewarding shareholders handsomely.