1 Future Dividend Aristocrat

From Procter & Gamble to Coca-Cola to Johnson & Johnson, certain stocks have proven themselves as dividend aristocrats over the years. These stocks have earned the title of dividend aristocrat by increasing the dividend payout to their shareholders for many consecutive years. 

In addition, to be named a dividend aristocrat, a stock must meet three essential requirements. These requirements include being in the S&P 500 index, providing 25+ years of dividend increases, and a minimum float-adjusted capitalization of at least $3 billion while averaging at least $5 million in daily share trading value for the three months prior.  

While we already have a great deal of information on current dividend aristocrats, what about future dividend aristocrats? Well, one possible candidate may be a REIT trading under the stock ticker AMT. The American Tower Corporation or AMT REIT has continually proven itself as a high dividend-paying REIT with impressive growth. 

While other REITs faltered during the COVID-19 pandemic, AMT was actually able to see continued growth rates. So why is AMT shaping up to be a dividend aristocrat in the future? Let’s start with that it does.

AMT: A REIT Extraordinaire

A REIT or real estate investment trust refers to a company that owns or finances a multitude of income-producing real estate across a wide range of property sectors. However, not all real estate companies are considered REITs, as real estate companies must meet many requirements to qualify as an official REIT. 

From an investor standpoint, REITs are a great opportunity for investors to access opportunities in the real estate industry without directly investing in real estate property.  REITs collectively own more than $3.5 trillion in gross assets and more than 500,000 properties across the United States.

Overall, REITs have historically proven to be excellent investment opportunities for investors looking to receive steady dividend income as well as long-term capital appreciation. One REIT that has a proven track record and the potential to become a dividend aristocrat is the American Tower Corporation.  

American Tower Corporation (AMT): A Snapshot

Founded in 1995, the American Tower Corporation is a real estate investment trust headquartered out of Boston, Massachusetts.

In the late 90s, the American Tower Corporation began international expansion by establishing new operations in Mexico and Brazil. During this time, the American Tower Corporation also began purchasing AT&T Long Lines microwave telephone relay towers.  

After acquiring a vast amount of telephone relay towers, the American Tower Corporation then began repurposing these towers to cell towers. It then began lending antenna space to various cell phone providers and private industries.

Today, the American Tower Corporation owns the majority of tower structures across the continental United States, and its main business comes from leading antennae sites to major communication networks.  

In 1998, the American Tower Corporation went public on the New York Stock Exchange under the stock ticker AMT. The REIT began trading on the stock exchange at $23.50 per share. As of March 2022, the AMT is trading around $230 per share. In August 2021, AMT reached an all-time high of $300 per share. 

Is AMT a Future Dividend Aristocrat?

During the early stages of the COVID-19 pandemic, the stock market took a huge hit. Stocks in nearly every sector experienced major dips in their stock price. However, during this time, AMT came out nearly unscathed and was even able to increase its revenue.

Unfortunately, many other REITs took huge hits around March 2020 and saw massive revenue declines in the months following.  

These factors, along with AMT’s rich history, indicate that AMT has the potential to become a dividend aristocrat in the future. Here are three key reasons that could lead AMT to become a dividend aristocrat. 

3. Essential 21st Century Business With a Great Business Model 

One reason that AMT is set up to become a dividend aristocrat is due to its core business model.

Unlike typical REITs, the AMT business model relies on leasing their communication sites or cell phone towers to major cell providers in the United States like Verizon Communications.

Cell phone providers are an essential business. In turn, society’s reliance on cell phone communication makes AMT an essential business with a promising future ahead of itself. 

2. AMT has Geographic Diversification and the Ability to Scale 

A second reason that illustrates that AMT has the potential to become a dividend aristocrat is due to the company’s established geographic diversification.

AMT already has communication sites in 25 countries with a current market capitalization of $104 billion. AMT is also the most prominent cell tower REIT in the world today.

Overall, AMT’s established geographic diversification, combined with its ability to scale easily, places it in a very good position to establish itself as a dividend aristocrat in the future. 

1. AMT has Historically Exhibited Strong Dividend Growth  

Another key reason that indicates that AMT has the potential to become a dividend aristocrat in the near future is its historically strong dividend growth. While many stocks and other REITs fell flat during the beginning of the pandemic in March 2020, AMT stood strong and even experienced increased revenue. 

AMT’s increased revenue led to higher dividend payments throughout the early stages of the pandemic despite the havoc that the world was enduring during this time.

AMT paid out $3.78 per share to their stockholders in 2019. In 2020, it was able to boost its dividends payouts by over 19% paying its shareholders $4.53 per share.

During 2021, AMT also continued to show strong dividend growth paying out $5.03 per share to all of their stockholders.

AMT’s continued dividend growth is a strong indication that this REIT has a good chance of becoming a dividend aristocrat in the near future. 

Will AMT Become a Dividend Aristocrat? 

While nothing is certain when it comes to investing, the overall outlook for AMT is very promising. With AMT predicted to deliver high-single-digit to low-double-digit annual dividend payouts to shareholders for the foreseeable future, the chances of AMT becoming a dividend aristocrat are highly probable.

In addition to its 2.4% dividend yield, AMT is simply an attractive REIT option with a great blend of yield and growth prospects. Ultimately, this combination of factors indicates that AMT has a very good chance of becoming a dividend aristocrat within the next decade. 

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.