Real estate investment trusts (REITs) don't typically garner many headlines, like all great relationships, owning stock in the industry's top performers can be quite fulfilling for the long term, paying dividends along the way and providing a decent chance for share-price gains should you choose to cash out.
Consider, for example, Crown Castle International (CCI -1.33%). One of the country's largest owners of mobile towers went public in 1998 and became a REIT in 2014. Since that transition, which required it to begin paying out at least 90% of its taxable income to shareholders, this highly liquid real estate investment has bested the S&P 500 in total return, 223.1% to 190.3%. Here's why investors looking for a long-term relationship instead of a day trading fling may want to consider it adding it to their portfolio today.
But what's next?
Crown Castle is one of the three large REITs in the mobile tower space, along with American Tower (AMT -2.03%) and SBA Communications (SBAC -2.76%). That's a lot of competition, and there would seem to be only so much available growth for builders and operators of those big metal trees. But it's not just about towers anymore. Crown Castle is building a mix of telecommunications infrastructure that now includes more than 40,000 towers, about 80,000 small cells, and some 80,000 miles of broadband fiber.
Those expanding hyperlocal capabilities should allow Crown Castle and its shareholders to profit from 5G rollouts of all sizes, as well as such emerging solutions as the citizens broadband radio service (CBRS), a promising alternative to reliance on 4G and Wi-Fi for expanding wireless capabilities over small, shared networks.
The company, in that regard, points to deals it's made with two of its biggest tenants -- Verizon and T-Mobile -- to meet the growing demand for these kinds of next-phase 5G deployments. CEO Jay Brown says small-cell rollouts are only at their starting point and that his company is "uniquely positioned to benefit from this growth."
Meanwhile, the legacy mobile tower business isn't doing too shabby either. REITs depend on long-term leases with tenants who really need that space and pay well for it. No problem there. T-Mobile and DISH Network have both recently inked long-term deals (the latter for space on up to 20,000 towers) as they lock down the infrastructure to build out their 5G networks.
CEO Brown says they expect a 20% jump in core tower leasing this year after hitting record volume in 2021 that was 50% higher than its trailing five-year average. That, along with a stable fiber business and growing small-cell installations, has the company predicting adjusted funds from operations (AFFO) at the high range of its 2022 projections of $7.31 to $7.41 per share after 16% AFFO growth in 2021.
Crown Castle is currently paying a dividend of $1.47 a share, a payout it's raised for seven straight years, including by nearly 28% in the past three years. The stock is yielding about 3.33% while trading at about $176.69, down about 8.5% in 2022 and well below its 52-week high of $209.87 from Dec. 31. (Crown Castle was hardly alone here. AMT, the largest of all such REITs, fell 14% in January.)
The yield isn't inflation-beating, but not many dividend stocks are right now, and the somewhat depressed share price combined with Crown Castle's investment in hosting the many facets of 5G rollout and its record so far as the industry has emerged and accelerated ... well, they all point to a gift for your valentine that could pay off nicely for years to come.