Is American Tower (AMT) a Solid Pick for Your Portfolio Now?

American Tower Corporation’s AMT extensive and geographically diversified communication real estate portfolio is expected to significantly benefit from increased capital spending by wireless carriers. Incremental demand from global 4G and 5G deployment efforts, growing wireless penetration and spectrum auctions are likely to push up the spending levels of these players.

Recently, American Tower signed a long-term lease deal with Verizon Communications Inc. VZ. With this, Verizon has secured access to American Tower’s extensive portfolio of communications sites in the United States to deploy its nationwide 5G network.

American Tower has a solid track of delivering a healthy performance due to the robust demand for its global macro tower-oriented asset base. It has witnessed strong growth in key financial metrics while continuing platform expansion. Between 2011 and 2021, AMT’s revenues from the property segment and adjusted EBITDA witnessed a CAGR of 14.2% and 14.1%, respectively.

Amid secular growth trends in the wireless industry, the healthy performance is expected to continue in 2022, with management projecting property revenues and adjusted EBITDA to increase 13.8% and 10.1%, respectively, at the midpoint. We expect property revenues and adjusted EBITDA to increase 14.3% and 9.5% in 2022 and 4.8% and 6.5% in 2023, respectively.

Further, American Tower continues its focus on macro-tower investment opportunities and gaining scale in attractive global markets. We expect a 13.7% increase in total International property revenues in 2022. American Tower is also strengthening its data center assets through acquisitions. It has solid balance sheet strength to support its growth endeavors.

Solid dividend payouts are arguably the biggest enticements for REIT shareholders, and American Tower remains committed to that. In May 2022, the company announced a 2.1% sequential hike in the quarterly dividend to $1.43 per share.

The company has consistently increased its quarterly dividends since 2012. Its average annual dividend per share has grown more than 20% since 2012. Such disbursements highlight its operational strength and commitment to rewarding shareholders handsomely.

Given our projected increase in consolidated adjusted funds from operations (AFFO) of 7.1% in 2022 and 6.1% in 2023 and its lower-than-industry dividend payout, we expect its dividend distribution to be sustainable.

Moreover, shares of American Tower have risen 11.5% in the past six months compared to the industry’s decline of 9.4%. AMT’s long-term growth rate is projected at 11.6%, ahead of the industry average of 7.9%. Also, the Zacks Consensus Estimate for the company’s 2022 funds from operations (FFO) per share has been revised marginally upward in the past month.

Image Source: Zacks Investment Research

Stocks to Consider

Some key picks from the REIT sector include Extra Space Storage EXR and Host Hotels & Resorts HST.

The Zacks Consensus Estimate for Extra Space Storage’s ongoing year’s FFO per share has been raised 1.9% over the past month to $8.46. EXR carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Host Hotels & Resorts’ 2022 FFO per share has moved 1.7% upward in the past month to $1.75. HST presently carries a Zacks Rank of 2.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

Want to Know the #1 Semiconductor Stock for 2022?

Few people know how promising the semiconductor market is. Over the last couple of years, disruptions to the supply chain have caused shortages in several industries. The absence of one single semiconductor can stop all operations in certain industries.

This year, companies that create and produce this essential material will have incredible pricing power. For a limited time, Zacks is revealing the top semiconductor stock for 2022. You'll find it in our new Special Report, One Semiconductor Stock Stands to Gain the Most.

Today, it's yours free with no obligation.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.