American Tower Stock Rises 11.2% YTD: Will it Continue to Rise?

American Tower AMT shares have increased 11.2% year to date compared with the industry's growth of 4.9%.

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 #3 (Hold) company. The Zacks Consensus Estimate for its 2025 adjusted funds from operations (FFO) per share increased a cent in the past month to $10.60.

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 remain strong. Given its portfolio of nearly 150,000 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 June 30, 2025, was 5.1. As of June 30, 2025, AMT had $10.5 billion in total liquidity. With a weighted average remaining term of debt of 5.6 years, it has decent financial flexibility. As of the end of the second quarter of 2025, it enjoyed investment-grade credit ratings of BBB (Stable Outlook) and Baa3 (Positive 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.

With the above-mentioned factors, we believe the rising trend in the stock is expected to continue in the near term.

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. High interest expenses remain a concern.

Stocks to Consider

Some better-ranked stocks from the broader REIT sector are Plymouth Industrial REIT PLYM and Pebblebrook Hotel Trust PEB, each 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 PLYM’s 2025 FFO per share has moved 2 cents northward to $1.88 over the past month.

The Zacks Consensus Estimate for PEB’s 2025 FFO per share has moved a cent upward to $1.43 over the past month.

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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