Cell tower and small cell network site operator Crown Castle International (NYSE:CCI) reported third-quarter results last week. There were few surprises, other than a 7% increase to the company's dividend payouts. Let's have a closer look at this report.

Crown Castle's third-quarter results by the numbers

Metric

Q3 2019

Q3 2018

Change

Net revenues

$1.51 billion

$1.38 billion

9.4%

Net income attributable to common shareholders

$244 million

$136 million

79%

Adjusted funds from operations (AFFO)

$646 million

$579 million

12%

AFFO per share (diluted)

$1.55

$1.39

12%

Data source: Crown Castle. GAAP = generally accepted accounting principles. AFFO is a commonly reported profit metric for real estate investment trusts, often seen as a better measurement of day-to-day operations than GAAP earnings.

What's new with Crown Castle?

The company added a net of 10 towers during the second quarter, adding up to 40,061 sites. Fiber assets held steady at 75,000 route miles. A year ago, Crown Castle managed 40,027 towers and 65,000 route miles of fiber. In other words, the tower and fiber networks didn't exactly grow by leaps and bounds in the second quarter.

Squeezing 9.4% of year-over-year revenue growth out of a relatively stable asset package points to the value of 10,000 extra miles of fiber and of the steady payment increases that are built into Crown Castle's lease agreements. The company now collects $115,000 per rental site, per year, for towers built or acquired no later than 2006. Newer sites pull in $68,000 annually. That's 4.5% above the $110,000 and $65,000, respectively, in the year-ago quarter. This is Crown Castle simply executing crisply on a standard practice in the asset management sector.

Separately, Crown Castle also announced its next quarterly dividend along with a 7% year-over-year increase. At the new quarterly rate of $1.20 per share, Crown Castle's stock now comes with a 3.4% effective dividend yield.

A cell tower in stark silhouette against a colorful sunrise.

Image source: Getty Images.

Color commentary from the CEO

Just like in the second quarter, CEO Jay Brown focused much of his earnings call airtime on the opportunity seen in small cell networks.

"We have rapidly scaled our small cell business to where we are today, with 70,000 small cells on air or under construction, and we believe we are still in the very early innings," Brown said.

How early are those innings? Brown seems to think it's the bottom of the first.

"According to CTIA the number of small cells deployed in the U.S. is expected to increase nearly tenfold from 85,000 at the end of last year to 800,000 by 2026," he continued. "Against that backdrop, we see tremendous opportunity to increase the returns on our fiber investments over time by adding new small cell tenants to existing fiber networks, as we're doing today."

Is Crown Castle a buy today?

Crown Castle investors have enjoyed a 37% dividend-adjusted return over the last year, or 67% in three years, easily surpassing the S&P 500 (with reinvested dividends) in both cases. The stock is trading at a lofty 83 times earnings, or 93 times free cash flows.

I still think this company is playing second fiddle to sector peer American Tower in many ways, particularly when it comes to international growth ambitions and buy-in prices. But that doesn't mean I see Crown Castle as a bad investment, especially if you're into maximizing your portfolio's dividend yields. Business is rolling along just fine, and the incoming wave of 5G network installations should help Crown Castle create shareholder value over the next few years.