American Tower is a beneficiary of the growing demand for data.
Tower Corporation (AMT), which leases space for cellular towers, is one of the primary beneficiaries of the growing demand for data transmission. According to forecasts, a typical mobile user currently consumes 11.4 GB of data, but this usage to grow to 41 GB by the end of 2027.
The Represents a cumulative average growth rate of 24% per year. It is the American Tower REIT that can benefit from this rapid growth. The company currently operates in a duopoly with competitor Crown Castle International. This market position gives both companies more room to raise prices and increase profits. In addition, American Tower leases space on its towers to wireless operators, radio and television broadcasters, wireless data providers, and government organizations. In the USA, the largest customers of American Tower are AT&T, T-Mobile, and Verizon.
The lease of American Tower is usually long-term (from five to ten years) with an automatic increase of 3% each year. Despite such high rental rates, the percentage of non-renewable contracts is only 1-2% per year. As a result, American Tower has a positive dividend payout history. Recently, the company has increased them: by 6% to $1.39 per share. In general, since 2012, the company has been growing its dividends every quarter, and the dividend yield is approaching 2%. At the moment, this is not the highest indicator for a REIT, but American Tower is investing heavily in future development. The advantage is working in a fast-growing market and a strong position in the wireless infrastructure industry.
