American Tower: The Telecom Dividend Stock to Watch in 2024?

American Tower Corporation (AMT) has been a standout performer in the telecom sector, offering investors a compelling combination of dividend growth and global exposure. As we approach 2024, the question on many investors' minds is whether AMT remains the best telecom dividend stock to buy. This article explores the factors that make AMT an attractive choice and examines the challenges it faces in the coming year.



AMT's global portfolio expansion has been a significant driver of its dividend growth. With over 220,000 cell towers across the US, Asia, Latin America, Europe, and Africa, AMT is well-positioned to benefit from increasing demand for mobile computing and cellphone usage. Its concentrated customer base, dominated by top mobile carriers, ensures stable revenue streams. Additionally, AMT's expansion into data centers, though initially met with skepticism, offers additional growth potential.



AMT's dividend yield has consistently outperformed its peers in the Real Estate sector. While its yield has shown a slight downward trend, from a high of 4.2% in 2019 to the current 3.4%, it remains attractive compared to its peers and the broader market. AMT's dividend growth rate, with a 10-year compound annual rate of 20%, is also impressive, indicating a strong commitment to returning value to shareholders.

However, AMT faces challenges in 2024. The company's adjusted funds from operations (FFO) were down 0.4% year over year in the first quarter, and the full-year target is for a roughly 1% drop, year over year, in 2023. This decline, coupled with a nearly 40% price decline since mid-2021, has raised concerns about AMT's growth prospects. Nevertheless, AMT's dividend yield remains high, and its long-term growth story is still intact.



The increasing demand for data and Internet-of-Things (IoT) connections is a significant tailwind for AMT's dividend growth in 2024. According to a report by Fool.com, IoT connections are expected to expand at a 16% annual rate over the next five years, while regular cell demand grows at 2% per year. This growth drives the need for additional capacity, leading to more equipment installed at cell towers. AMT's business model leverages this demand, with gross margins increasing from 40% with one tenant to over 80% with three tenants. As a result, AMT's dividend is poised to continue its rapid growth in 2024, driven by the increasing demand for data and IoT connections.

In conclusion, American Tower Corporation remains an attractive choice for telecom dividend investors in 2024. Its global portfolio, dividend growth, and exposure to increasing demand for data and IoT connections make a strong case for investing in AMT. However, investors should be aware of the challenges AMT faces in 2024 and monitor its progress closely. As always, it is essential to conduct thorough research and consider your investment goals and risk tolerance before making any investment decisions.