American Tower Is A Great Buy At Today's Levels

20+ % Correction Since June Offers Multi-Year Entry Point

American Tower (AMTis one of the largest owners and operators of communication towers in the world. This REIT has a large asset base backed by physical assets and has been growing its dividends at an average rate of 20% per year. Many countries are now planning to upgrade their network infrastructures from 4G to 5G, potentially increasing connection speeds by a factor of 100. This tailwind is beneficial for American Tower's business, as wireless carriers and telecommunication companies will require even more communication towers as they build up their infrastructure requirements. The COVID-19 pandemic has also acted as a strong catalyst for the digitalization of businesses and driving up data downloads and usage, thereby increasing demand for connectivity and reduced lag times. The REIT is well-placed to grow over the long term, as lessees should continue to sign long-term leases to utilize its towers.

In early November, American Tower announced an agreement to acquire InSite Wireless Group for $3.5 billion. This acquisition will add a portfolio of around 3,000 communication sites in the U.S. and Canada to the company's portfolio and marks the REIT's first foray into Canada. American Tower was able to borrow at very cheap rates, with its 2024 notes having a coupon rate of just 0.6% and the 2028 Notes having a coupon rate of 1.5%. These low rates should allow the company to earn a very attractive return on these assets as demand rises globally for communication sites.

(Source: Earnings Call)

Management raised its AFFO/share guidance for FY2020 last quarter, reflecting 10.8% growth on a constant-currency basis. It's very likely that we're going to see continued growth of 8-10% over the foreseeable future. Furthermore, it has inked a 15-year lease deal with T-Mobile. The new deal will provide long-term revenue growth for American Tower while enhancing T-Mobile’s ability to provide 5G service.

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