This Best Idea firm has solid domestic and emerging-markets exposure to mobile-traffic trends and plans to increase its payout by 20% per annum for at least five years.
Imari Love: Today, we are going to talk about American Tower, ticker AMT, which remains on our Best Ideas list after another stellar first-quarter earnings report in which the bested consensus expectations and raised its full-year outlook.
I frame the investment thesis on American Tower by saying, amidst the backdrop of global mobile data traffic growing 13 times over this five-year time span and network connection speeds growing 7 times over that time span, the best way to exploit this from an investment perspective is by investing in the tower companies which service carriers such as AT&T and Verizon who are forced to continuously invest in coverage expansion and site densification.
What's great about American Tower specifically is it gives you exposure to the same secular growth names in faster-growing markets such as Brazil, India, and Africa. What we feel the market underappreciates is that the returns on invested capital abroad are even better than they are domestically because of faster lease-ups, lower building costs, and pass through.
AMT also now pays a dividend which it plans to grow at 20% per annum over the next five to seven years. At 0.89 times our price/fair value ratio we believe American Tower is fundamentally undervalued.
