Key Reasons to Add American Tower Stock to Your Portfolio Now

American Tower AMT is well-positioned to benefit from increased investment by wireless carriers in 5G networks. The long-term leases with its tenants assure stable cash flows. Prudent capital-allocation strategy and strong balance sheet augur well for growth.

Moreover, its growing portfolio of data centers to capitalize on the rising Artificial Intelligence (AI) boom will diversify its revenue stream, yielding stability.

Shares of this Zacks Rank #2 (Buy) company have gained 3.3% over the past month against its industry's fall of 0.4%. Given the strength in its fundamentals, there seems to be additional room for growth of this stock.

Factors That Make American Tower a Solid Pick

Favorable Industry Tailwinds: The advent of next-generation technologies, including edge computing functionality, autonomous vehicle networks and the Internet-of-Things (IoT), and the rampant usage of network-intensive applications for video conferencing and cloud services and hybrid-working scenarios have rapidly increased wireless connectivity usage. Amid this, wireless service providers and carriers have been deploying additional equipment for existing networks to enhance network coverage and capacity. Given its portfolio of nearly 149,000 communication sites worldwide, American Tower is strategically positioned to capture this incremental demand.

Long Term Leases - American Tower has a resilient and stable business model that provides a safe harbor. The company generates most of its revenues from non-cancellable, long-term (typically five-10 year) tower leases with major wireless carriers with multiple renewal period options. The revenues generated from leasing and managing such networks are substantial and recurring.

Prudent Capital Allocation: American Tower is restructuring its portfolio with the divestment of non-core assets in high-risk developing markets so that it can effectively operate in low-risk developed markets, augmenting margin expansion. In 2025, the company plans to direct more than 75% of its $1.5 billion discretionary spending toward developed markets, including the United States, Canada and Europe.

Data Center Boom: With growth in cloud computing, IoT and Big Data, and an increasing number of companies opting for third-party IT infrastructure, data-center companies are experiencing a boom market. In order to capitalize on this growing trend, AMT intends to invest more than $600 million to expand its data center footprint in 2025. In the first quarter of 2025, AMT attained data center revenue growth of 8.4%.

Robust Balance Sheet: American Tower has a robust operating platform and ample liquidity to support its debt servicing. As of March 31, 2025, the company had $11.7 billion in total liquidity. It has achieved its net leverage target of 5X EBITDA in the first quarter of 2025, with floating-rate debt at just 4%.

Sustainable Dividend Payout: American Tower has a disciplined capital distribution strategy and remains committed to increasing shareholder value through regular dividend hikes. It has increased its dividend 14 times, with an annualized dividend growth rate of 9.07%. Backed by robust operating fundamentals, we expect the company’s dividend distribution to be sustainable in the upcoming period.

Other Stocks to Consider

Some other top-ranked stocks from the broader REIT sector are VICI Properties VICI and W.P. Carey WPC, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for VICI Properties’ 2025 FFO per share is pinned at $2.35, indicating year-over-year growth of 4%.

The Zacks Consensus Estimate for W.P. Carey’s 2025 FFO per share stands at $4.88, indicating an increase of 3.8% from the year-ago reported figure.

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.

This article originally published on Zacks Investment Research (zacks.com).

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