Our tendency to stare at our phones all day may not be good for conversation but it's great for American Tower (AMT), which acts like a "toll bridge" for cell phone traffic, asserts Brett Owens, income expert and editor of  Contrarian Outlook's Hidden Yields.

The cell-tower operator is a landlord for mobile phone traffic, collecting rents via its 170,000 towers — from carriers such as AT&T (T) and Verizon (VZ). And this highway is only getting busier. Back in the day, phones were only used for actual phone calls and they didn't take up much network bandwidth.

Fast-forward to today, and you might be reading this issue from your phone! That consumes more network juice than a simple call. And if you watch any videos from your phone, and you're not connected to WiFi, you are consuming plenty of bandwidth.

It's a good time to be a cell phone landlord no matter which country you pick. In developed places like the US, we're consuming more media from our phones, which asks more and more from the cell towers. And in developing countries like India, demand is increasing thanks to a ballooning middle class.

International opportunities can actually be more lucrative for AMT because these countries are not as "hard wired" as the US. They are skipping computers and going straight to smartphones. This is great for AMT, which has 76% of its towers outside of America's borders including fast-growing India.

India recently upgraded its network from "old school" 2G technology to 3G and 4G - just in time for an upgrade to 5G! Every extra "G" is good for our landlord, because it means more phone usage.

Thanks to its existing towers, AMT management has a true cash cow on its hands. It doesn't have to spend as much to grow these days as it used to. And because capital expenditures are 50% lower today than they were ten years ago, rent checks result in higher and higher free cash flow (FCF):

chart 1

Pressured to do something with its booming free cash flow, management hikes AMT's dividend every single quarter. The result? Investors have enjoyed 172% payout growth over the last five years. Yet they've actually been shortchanged thus far in terms of returns for the stock alone, having to settle for "only" 110% price gains:

chart 2

We love to buy when a stock price lags a company's dividend growth, because gains are just waiting to happen. So, an underpriced stock today makes AMT a great candidate for us. But its outlook for tomorrow - regardless of what happens in the stock market or economy-at-large - gives us the type of recession-proof growth investment we're looking for.

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