5G Kicker at American Tower?

08/13/2020 5:00 am EST

Focus: REITS

Brett Owens

Chief Investment Strategist, BNK Invest, Inc.

In the second-quarter of 2020, some 244 firms increased their dividends. That sounds pretty good until we see that 639 companies decreased their payouts during the same time period, asserts Brett Owens, editor of Hidden Yields.

In other words, dividend investors were two-and-a-half times as likely to receive a pay cut as they were a raise. Yikes.

We’ve always emphasized strong cash flows, bulletproof business models and growth in all economic environments. And now, with the virus economy creating a wide gap between the “dividend haves” and “payout have nots,” we are focusing on resilient payout growth more than ever. 

Our cell phone tower landlord American Tower (AMT) delivered not one but two dividend increases in the second quarter. Yes, you read that right.

AMT traditionally hikes its dividend four times per year — in April, June, September, and December — and 2020 has been no exception. June’s dividend payment of $1.10 is up two cents from April’s $1.08 payment. It also represents a 20% year-over-year payout increase.  

AMT is an ideal social distancing stock with a 5G kicker. As you can imagine, its towers are working these days with many of us sitting at home, staring at our phones and desperately searching for something to entertain us. 

We’re up 66% on our position (including dividends) since we bought AMT in November 2018. If you bought then, you’re banking a dividend that’s 39% higher and still climbing. 

It’s time to raise our buy price on AMT once again. We shouldn’t let our initial buy price (and dividend) anchor our thinking because the stock doesn’t care what we bought it at.

What’s important is that this firm is raising its dividend four times a year at a 20% annual clip. Shares pay a modest 1.6% today but remember, the real action is going to be in the pace of that dividend (and share price appreciation that goes along with it.)

AMT is a good buy at current levels. If it pulls back (which it rarely does, but this is 2020 after all), then it’ll be a great bargain. Buy American Tower up to $280.

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