As I write this, shares of American Tower Corp. (AMT) are rallying on strong second-quarter results. Can American Tower, which is one of the world’s largest Real Estate Investment Trusts (REITs), keep up the momentum? Is now the time to buy AMT? Let’s find out.
For those of you who haven’t heard of it, American Tower is a leading owner and operator of broadcast communications real estate. This includes everything from wireless towers to broadcast towers and DAS networks. American Tower operates about 160,000 of these towers worldwide.
American Tower profits directly from the smartphone boom, and the resulting spike in demand for LTE antennas. Today’s second-quarter report showed that business is still brisk.
Compared with the year ago quarter, total revenue climbed 7.1% to $1.78 billion. This beat the $1.75 billion consensus sales estimate by 1.7%. Over the same period, adjusted funds from operations rose 16.4% to $844 million, or $1.90 per share. Analysts expected $1.78 FFO, so American Tower posted a 6.7% surprise.
Looking ahead to FY 2018, analysts are calling for 14.2% annual earnings growth and 5.6% annual sales growth. Those are respectable numbers, but after today’s earnings report, I wouldn’t be surprised if those numbers are revised higher.
I must also mention AMT’s commitment to its shareholders. As a REIT, AMT is required to distribute at least 90% of its taxable income to shareholders in the form of dividends.
So, AMT currently has a solid 2.1% annual dividend yield. It has a strong dividend track record, having paid a dividend for 25 consecutive quarters. AMT also boasts a 4.8% 12-month dividend growth rate.
AMT will declare its next quarterly dividend sometime over the next few weeks. In the meantime, AMT is a B-rated Buy in my Dividend Grader tool. I also currently recommend the stock in my Growth Investor newsletter.