1 Ultra-Safe Dividend Growth Stock I Just Bought

American Tower (AMT 1.09%) continues to impress, especially from a revenue and dividend standpoint. In this video clip from "The Rank" on Motley Fool Live, recorded on July 27, Fool.com contributors Matt Frankel and Jason Hall discuss why it may be an opportune time to invest in the communications infrastructure company. 

Matt Frankel: American Tower, the deceptively named communications REIT [laughs]. American Tower, they have 221,000 cell towers. If you're driving down the road, see those big ugly hunks of metals sticking up in the air, that's American Tower's business. They lease out space to operators like AT&T (T 1.17%), Verizon (VZ 2.85%), T-Mobile (TMUS 0.55%), and other types of communication providers.

It's a solid business. They pretty much ground lease the land. They own the physical tower and then lease out space on the top of it to communications operators. They've done a great job of producing great returns for shareholders. They have returned about 13% annualized since their 1998 IPO, that's handily beating the S&P over that time.

Revenue is growing fast now. This might actually be the most exciting point in their growth because they're a big beneficiary of the 5G rollout, which needs more densification of networks. It's also worth mentioning that because they're in so many emerging markets, 4G networks are still being built out substantially around the world.

Let me ask Jason, this doesn't strike me as a value play because it's only down about 15% from the top. This strikes me, as more of a long-tailed growth opportunity that you accumulate a position in over time. Am I correct on that?

Jason Hall: It's a little bit of both. Because think about the recurring cash flows, the importance of their business. I think with this stock being down mid-teens is like anything else being down 25% or 30%, and so it was a little bit just seeing a really good entry point and I did verify, I couldn't remember if I bought this one earlier this spring or not.

This was my opening position in the company and it took me a while to really grow into understanding how to value it well. It's just too attractive of a business to not own. The dividend yield is back up to historical norms at this price. It's definitely not deeply discounted, but it's just a really fair price for a business that I don't think people appreciate how much it can grow, Matt.

Frankel: I would definitely agree with that it sounds like 220,000 towers how much growth could there possibly be? The answer is a lot. I mean, 5G networks need countless more. The small nodes, they need more towers closer together. It's a denser network format without getting too technical on it. There's a lot of room to add to its existing tower network.

One of the coolest parts of the business is that it costs the company virtually nothing to add more tenants to the same tower. Next time you're driving down the road cool little experiment. Look up when you see a cellphone tower, you'll notice rings of equipment around the top. Each ring is a tenant. If you see two rings of equipment, that's two different tenants on that tower.

They can add more and more tenants to each tower with virtually costing them nothing and really boosting their profit margin. They have a lot of towers with one or two tenants that could add more over time. Really interesting business and one that I like a lot going forward.

Great dividends stock too, by the way. A 2.3% yield isn't going to get it into any high dividend index anytime soon, but the payout ratio is very low for a REIT, it has a great track record of increasing the payout and could continue to do so over time. So I like this one. This one gets my stamp of approval.