American Tower Near Record High; Dividend Yields 1.3%


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Big Cap 20 stockAmerican Tower ( AMT ), which operates cellular towers used by wireless companies and broadcasters, has risen sharply this year amid growing demand for mobile devices.

The stock is near a new high after climbing 28% year-to-date, easily outpacing the S&P's 14% increase. The company recently increased its quarterly dividend by a penny, or 4%, to 24 cents a share. That brings the annual dividend yield to 1.3% compared with the 2.1% average for the S&P.

Demand for wireless towers has soared along with sales of smartphones, tablets and other devices that connect to the Internet via wireless communications networks. The evolution into faster 4G networks is also benefiting American Tower and rivalsCrown Castle International ( CCI ) andSBA Communications ( SBAC ).

Yet American Tower's fundamentals are mixed. Profit has been choppy, shooting up to $0.58 a share in Q3 from a $0.04 loss in the year-earlier period. But Q2 profit declined 59%, and Q4 earnings are seen slipping 18%.

Meanwhile, sales growth has slowed for two straight quarters, rising just 13% in Q3.

Nevertheless, Zacks Investment Research said earlier this month that American Tower's global expansion strategy and growing demand for towers to speed data transmission bode well for the future.

"Massive demand for wireless data and video throughout the world will boost American Tower's long-term growth," Zacks said. It has a neutral rating on the stock, however, citing its strong run-up over the past year.

Institutional investors have boosted their holdings for two straight quarters, led by top funds such as the Fidelity Magellan Fund and the Columbia Marsico 21st Century Fund.

American Tower earns about three-quarters of its revenue in the U.S., but it's been expanding into fast-growing markets in Asia and Latin America.

The stock recently cleared resistance at 76, though volume was weak. Meanwhile, AMT's up-down volume ratio has edged down to 1, indicating a standoff between buyers and sellers.

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

This article appears in: Personal Finance Investing Ideas
Referenced Stocks: AMT , CCI , SBAC

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