Should You Hold Onto American Tower Stock in Your Portfolio for Now?

American Tower Corporation AMT owns an extensive portfolio of around 149,000 communication sites globally, complemented by a network of well-connected U.S. data center facilities. This positions the company strongly within the digital infrastructure ecosystem.AMT stands to benefit from the ongoing global expansion of 5G, rising wireless usage and upcoming spectrum auctions. Additionally, the robust demand in the data center industry supports potential growth for its colocation business. A sound financial foundation further underpins its expansion strategy.That said, customer concentration and industry consolidation within wireless communications remain key challenges, potentially pressuring revenue growth.What’s Aiding AMT?American Tower has a solid track record of delivering healthy performance due to the robust demand for its global macro tower-oriented asset base. It has witnessed strong growth in key financial metrics while continuing to expand its platform. In the first quarter of 2025, the company recorded healthy year-over-year organic tenant billings growth of 4.7% and total tenant billings growth of 5.2%. Amid secular growth trends in the wireless industry, the healthy performance is expected to continue in 2025 and beyond.With the growth in cloud computing, the Internet of Things and Big Data, and an increasing number of companies opting for third-party IT infrastructure, data center companies are experiencing a boom in the market. Also, the estimated growth rates for the Artificial Intelligence (“AI”), autonomous vehicle and virtual/augmented reality markets will remain robust over the coming years. In the first quarter of 2025, the company attained data center revenue growth of 8.4%. In April 2025, American Tower completed the acquisition of a multi-tenant data center facility in Denver, CO, in which it previously leased space (DE1). Apart from having a robust operating platform, American Tower has ample liquidity to support its debt servicing. Its consistent adjusted EBITDA margins, revenue growth and favorable return on invested capital indicate strength in its core business and support its ability to manage its near-term obligations. As of March 31, 2025, AMT had $11.7 billion in total liquidity. With a weighted average remaining term of debt of 5.7 years, it has decent financial flexibility.American Tower has a disciplined capital distribution strategy and remains committed to increasing shareholder value through regular dividend hikes. In the last five years, American Tower has increased its dividend 15 times, and the annualized dividend growth rate for this period is 9.07%. Moreover, it has a lower dividend payout compared with its industry. Such disbursements highlight its operational strength and commitment to rewarding shareholders handsomely. Check American Tower’s dividend history here.So far in the year, shares of this Zacks Rank #3 (Hold) company have risen 15.9% against the industry's decline of 3.6%. Analysts seem bullish on this stock, with the Zacks Consensus Estimate for its 2025 funds from operations (FFO) per share being revised 1% upward over the past two months to $10.51.Image Source: Zacks Investment ResearchWhat’s Hurting AMT?Customer concentration is high for American Tower, with the company’s top three customers in terms of consolidated operating revenues for the first quarter of 2025 being T-Mobile TMUS (16%), AT&T T (15%) and Verizon Wireless (13%). The loss of TMUS, T or Verizon Wireless as customers, consolidation among them or a reduction in network spending may lead to a material impact on the company’s top line.The merger between T-Mobile and Sprint resulted in tower site overlap for American Tower. This merger has negatively impacted the company’s leasing revenues. In the first quarter of 2025, the churn was roughly 2% of its tenant billings, mainly driven by the churn in its U.S. & Canada property segment. Given the contractual lease cancellations and non-renewals by T-Mobile, including legacy Sprint Corporation leases, management expects the churn rate in its U.S. & Canada property segment will continue to be elevated through 2025. Moreover, management continues to expect organic tenant billings growth to be below 4% for the next two quarters due to Sprint churn before increasing to more than 5.5% in the fourth quarter of 2025.Despite the Federal Reserve announcing rate cuts in the second half of 2024, the interest rate is still high and is a concern for American Tower. Elevated rates imply a higher borrowing cost for the company, which would affect its ability to purchase or develop real estate. The company has a substantial debt burden, and its total debt as of March 31, 2025 was approximately $36.86 billion.A Stock to ConsiderA better-ranked stock to consider from the broader REIT sector is VICI Properties VICI, 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’s 2025 FFO per share is pegged at $2.34, suggesting year-over-year growth of 3.5%.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.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report American Tower Corporation (AMT): Free Stock Analysis Report AT&T Inc. (T): Free Stock Analysis Report T-Mobile US, Inc. (TMUS): Free Stock Analysis Report VICI Properties Inc. (VICI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks