American Tower (AMT -0.98%), a real estate investment trust (REIT) that owns telecom towers, communications sites, and data centers around the world, is about as stable as it gets. The company leases space on its towers to wireless network operators, signing long-term, non-cancellable leases. As long as mobile data usage continues to rise and wireless carriers continue to invest in their networks, American Tower should see solid revenue and profit growth over the long run.

In the short run, American Tower is somewhat sensitive to economic conditions and the investment cycles of its customers. In tough times, wireless carriers can pull back on capital spending. And as carriers wrap up the capital-intensive process of building out 5G wireless networks, American Tower's growth could slow in the U.S.

These challenges have been part of the reason for American Tower's poor stock performance this year. Prior to the company's third-quarter report, American Tower stock was down nearly 24% since the start of 2023. A strong earnings report on Thursday flipped the script, sending the stock soaring and erasing a portion of those losses. American Tower's results and guidance should help quell any concerns investors had about the stock.

Growth and a guidance bump

American Tower grew its total revenue by 5.5% year over year to $2.82 billion in Q3, and it grew its property revenue by 7% to $2.79 billion. Property revenue was up in most geographies, and the data center segment grew revenue by 9%.

The company booked a sizable goodwill impairment charge related to its business in India, which hurt reported net income. But adjusted funds from operations (AFFO) per share rose 9.3% to $2.58, thanks to higher revenue and the company's efforts to keep costs in check. Free cash flow soared over 90%, although this metric can be volatile.

American Tower raised its guidance for the full year following its strong Q3 results. The company now expects property revenue to grow by 4.5%, up from a previous outlook calling for 3.9% growth. AFFO per share is now expected between $9.72 and $9.85, slight growth compared to 2022 and up from a previous guidance range of $9.61 to $9.79. Tenant billings should grow by about 7% in 2023, with 5% growth in the U.S. and Canada, and 9% growth in international markets.

A safe dividend stock

American Tower stock now sports a forward dividend yield of roughly 3.6% following the stock's post-earnings rally. That yield isn't as impressive today given how quickly interest rates have risen, but American Tower's dividend is both safe and has the potential to grow in the coming years.

Based on the latest dividend payment, American Tower will pay out $6.28 per share in dividends annually. That represents 64% of AFFO at the midpoint of the company's guidance range. While AFFO growth will be slow this year, the profit metric can rise faster as American Tower grows revenue and continues to keep a lid on costs. In Q3, the company managed to slightly reduce the direct costs associated with its properties, and it kept other operating costs approximately unchanged.

Shares of American Tower are still down more than 40% from their pandemic-era high. While the company is certainly facing some headwinds, the stock now trades below pre-pandemic levels. With American Tower focused on increasing efficiency while still growing revenue, now's a great time to buy this top dividend stock.