The board of directors of
American Tower Corporation
) - a leading global wireless communications tower operator - has
approved a hike of 6.3% in the company's quarterly cash dividend to
34 cents per share of its common stock. The increased dividend will
be paid on July 16, 2014 to shareholders of record at the close of
business on June 17, 2014.
We believe the dividend increment is supported by American
Tower's blockbuster financial numbers for the first quarter of
2014, which came on the back increased deployment of 3G/4G networks
and aggressive buying of towers in emerging markets. At the end of
first-quarter 2014, American Tower generated $476.6 million in cash
from operations, against $394 million in the prior-year
The company benefits from the increasing numbers of mobile
subscribers which has significantly boosted the wireless tower
industry. Moreover, future financials are likely to be propelled by
strong demand for wireless voice, broadband wireless data and video
networks, which require more tower space.
Next-generation 4G LTE networks coupled with increased usage of
smartphones and tablets should also create impressive demand for
tower leasing. The Master Lease Agreement (MLA) for 9 years signed
with Sprint Nextel Corp. is expected to boost top-line growth going
ahead. American Tower generates most of its revenues from long-term
(typically 5-10 years) tower leases with major wireless
In addition, the company provides on-site maintenance and
servicing of antennas, amplifiers and base station equipment. Since
moving equipment from one tower to another is cumbersome, carriers
normally renew these contracts upon expiration. This generates a
strong long-term lease up-cycle for the company.
American Tower has practiced dividend hikes over the last nine
quarters. The dividend yield based on increased dividend and the
last trading price is 1.5%. In this regard,
Crown Castle International Corp.
The GEO Group, Inc.
W. P. Carey Inc.
) pose competitive threat to American Tower. Recently, these three
companies paid quarterly dividends of 35 cents, 57 cents and 89.5
cents with dividend yields of 1.8%, 6.8% and 5.7%,
American Tower currently has a Zacks Rank #3 (Hold).
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AMER TOWER CORP (AMT): Free Stock Analysis
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