American Tower Stock Up 19.3% YTD: Will It Continue to Rise?

American Tower AMT shares have risen 19.3% year to date compared with the industry's growth of 5.4%.

The company is likely to benefit from increased investments by wireless carriers in 5G networks. Solid business fundamentals and a prudent capital allocation strategy augur well for growth.

Analysts seem bullish on this Zacks Rank #2 (Buy) stock, with the Zacks Consensus Estimate for its 2025 AFFO revised marginally northward to $10.55 over the past week.

Factors Behind AMT Stock Price Surge: Will the Trend Last?

American Tower owns an extensive, geographically diversified communication real estate portfolio. With wireless carriers increasing capital expenditure due to rising wireless penetration, accelerated 5G network deployment efforts and spectrum auctions, demand is likely to stay strong. Given its portfolio of nearly 149,000 communication sites worldwide and a highly interconnected footprint of U.S. data center facilities, American Tower is strategically positioned to capture incremental demand.

American Tower has a solid track record of delivering healthy performance due to the robust demand for its global tower-oriented asset base. It has witnessed strong growth in key financial metrics while continuing platform expansion. Amid secular growth trends in the wireless industry, the healthy performance is expected to continue in 2025 and beyond.

American Tower has a resilient and stable business model that provides a safe harbor. The company generates most of its revenues from non-cancellable, long-term (typically five to 10 years) tower leases with major wireless carriers with multiple renewal period options. Since moving equipment from one tower to another is cumbersome, carriers normally renew these contracts upon expiration. This generates a strong long-term lease-up cycle. Revenues generated from leasing and managing such networks are substantial and recurring.

American Tower has a robust operating platform and ample liquidity to support its debt servicing. The company's net leverage ratio as of March 31, 2025 was 5.0. 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. As of the end of the first quarter of 2025, it enjoyed investment-grade credit ratings of BBB and Baa3 and a stable outlook from Standard & Poor’s and Moody’s, respectively, enabling the company to borrow at a favorable rate.

American Tower has a disciplined capital distribution strategy and remains committed to increasing shareholder value through regular dividend hikes. It has increased its dividend 14 times with an annualized dividend growth rate of 8.26% over the past five years. Backed by robust operating fundamentals, we expect the company’s dividend distribution to be sustainable in the upcoming period.

Key Risks for AMT

High customer concentration and the ongoing consolidation in the wireless industry are likely to weigh on American Tower’s top-line growth. Elevated interest expenses and Sprint churn remain concerns.

Other Stocks to Consider

Some other top-ranked stocks from the broader REIT sector are SBA Communications SBAC and Cousins Properties CUZ, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for SBA Communications’ 2025 FFO per share has moved northward marginally in the past week to $12.77.

The consensus estimate for Cousins Properties’ 2025 FFO per share has been raised marginally over the past two months to $2.80.

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.

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This article originally published on Zacks Investment Research (zacks.com).

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