We recently compiled a list of the 10 Best Telecom Dividend Stocks To Buy for 2024. In this article, we are going to take a look at where American Tower Corporation (NYSE:AMT) stands against the other telecom dividend stocks.

The telecommunications sector plays a vital role in the United States, attracting considerable interest from investors due to its steady focus on innovation and rapid technological advancements. Beyond offering standard voice and data services, telecom firms drive progress by introducing innovations such as 5G technology, Internet of Things (IoT) solutions, and cloud computing, which support digital transformation across multiple industries. Investor interest in the sector is evident from estimates showing that from 1985 to 2020, wireless network operators invested over $600 billion in capital expenditures, according to a report by the Cellular Telecommunications Industry Association (CTIA). This figure excludes the more than $120 billion paid to the federal government for spectrum rights, which are essential for powering networks and meeting consumer demand for wireless services.

The CTIA report also mentioned that the significant spending on spectrum and infrastructure over the past decade has enabled the wireless industry to provide services to hundreds of millions of consumers across the US. This has resulted in nearly $9.5 trillion in gross output, $5.4 trillion in GDP, and an average of over 3 million jobs annually. In 2020 alone, the industry generated more than $1.3 trillion in gross output, $825 billion in GDP, and supported close to 4.5 million jobs in the U.S. economy.

Also read: Retirement Stock Portfolio: 7 Safe Dividend Stocks To Invest In

As 2025 draws near, the telecommunications industry is evolving rapidly, driven by a mix of challenges and opportunities that will influence its future path. Rapid technological advancements, rising consumer demand for faster and higher-quality internet, and ongoing shifts in the business landscape contribute to the sector’s dynamic nature. Analysts suggested that while predicting the future always carries uncertainties, it is clear that groundbreaking technologies, particularly artificial intelligence, will play a transformative role in the telecommunications industry. Simultaneously, societal factors such as the climate crisis, demographic changes, and geopolitical challenges will compel operators to innovate and adapt at a faster pace to stay competitive. Jelena Trivan, CEO of Mtel, also discussed artificial intelligence during an interview with Bloomberg. Here are some of her comments:

“In telecommunications future, AI will play an important role in the industry transformation. It will enable a more efficient data processing, network optimization, and improvement of the customer experience. Customer support automation, through chatbots and virtual assistants, will reduce waiting time and increase customer experience. Also, AI will help in predicting and resolving network problems before they reach critical level, by which the reliability of the services will be increased. With introduction of modern communication tools, we will provide for personalized offers for the customers, customized to their needs and habits, and our business processes will become even faster and more efficient.”

Telecom stocks have been delivering impressive returns this year, driven by the sector’s significant economic contribution and promising outlook. In 2024, the telecom industry has outperformed the broader market. The Telecom Select Industry Index, which measures the performance of stocks within the market’s Total Market Index in sub-industries such as Alternative Carriers, Communications Equipment, Integrated Telecom Services, and Wireless Telecom Services, has gained over 33% year-to-date, surpassing the market’s 24% return.

Alongside their impressive returns, telecom stocks are recognized for providing reliable dividend income. Janus Henderson’s annual dividend report revealed that these stocks distributed $73.7 billion in dividends in 2023, growing from $73.2 billion in 2022. In this article, we will take a look at some of the best dividend stocks from the telecom sector.

Our Methodology:

For this list, we scanned Insider Monkey’s database of 900 hedge funds as of Q3 2024 and selected stocks that belong to the telecom sector or provide services in the industry and pay dividends to shareholders. From the resultant list, we picked 10 stocks with the highest number of hedge fund investors and ranked them in ascending order of hedge funds’ sentiment towards them.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).

American Tower Corporation (NYSE:AMT)

Number of Hedge Fund Holders: 73

American Tower Corporation (NYSE:AMT) is an American real estate investment trust company that specializes in wireless and broadcast communications infrastructure in several countries. For Q3 2024, the company reported revenue of $2.52 billion, marking a 10.5% decline compared to the same period last year. During the quarter, a significant move for the company was the sale of its underperforming tower operations in India to Brookfield Infrastructure. This deal allowed Brookfield to strengthen its position in the Indian market, increasing its tower portfolio from 175,000 to 253,000 towers and expanding its customer base. Brookfield acquired these assets at an attractive price, as American Tower had faced profitability challenges with the portfolio due to tenant-related issues.

The difficulties faced by American Tower Corporation (NYSE:AMT) are overshadowing the strong and steady demand for communications and data infrastructure. However, as these challenges are expected to ease, the REIT has the potential for substantial growth starting in 2025 and continuing thereafter.

That said, Mar Vista Investment Partners, LLC highlighted the strengths of American Tower Corporation (NYSE:AMT)’s business in its Q3 2024 investor letter:

“American Tower Corporation’s (NYSE:AMT) stock rebounded nearly 20% during the third quarter, helped by the tailwind of lower interest rates. The stock has now appreciated more than one-third since U.S. 10-Yr Treasury interest rates peaked in late April 2024. As a levered REIT, lower rates benefit AMT’s equity value through a lower cost of debt and a higher value for its long-duration cash flows. Fundamental expectations did not change materially during the quarter as the company modestly increased their growth expectations for the year. The long-term global opportunities for 5G deployment, edge-of-network computing, and datacenters, remain attractive and are not fully reflected in the current stock price, in our opinion.”

American Tower Corporation (NYSE:AMT) currently pays a quarterly dividend of $1.62 per share. While the company has not increased its dividend this year, it has consistently raised payouts at an average annual rate of 20% since 2013. The company has achieved substantial growth by expanding its data infrastructure portfolio to keep pace with the increasing demand for data. Despite facing challenges in 2024, American Tower expects a rebound starting in 2025, which will position the company to resume its dividend hikes. This outlook makes it an attractive option for investors seeking both steady income and significant growth potential. The stock has a dividend yield of 3.62%, as of December 19.

At the end of Q3 2024, American Tower Corporation (NYSE:AMT) was a favored stock among top hedge funds, with the number of hedge fund positions rising to 73, up from 63 in the previous quarter, according to Insider Monkey’s database. The total value of these holdings exceeds $3.7 billion.

Overall AMT ranks 1st on our list of the best telecom dividend stocks to buy for 2024. While we acknowledge the potential of AMT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. 

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Disclosure: None. This article is originally published at Insider Monkey.