American Tower (AMT 3.79%) and Crown Castle (CCI 2.77%) have a lot in common. Each of these owners of cell towers and related infrastructure launched during the early days of the wireless communications revolution, and they've enjoyed similar success along the way. 

They're both real estate investment trusts (REITs). They're also both deeply committed to and confident in the rollout of 5G and other next-generation wireless technologies. These technologies are part of a digital world that has expanded from cellphones to an artificial intelligence-driven Internet of Things with no signs of slowing growth.

American Tower now has about 223,000 sites in over two dozen countries around the world, including more than 43,000 towers and distributed antenna systems in the U.S. The Boston-based trust is also making its mark in data centers, having purchased fellow REIT CoreSite Realty and its dozens of facilities in a $10 billion deal announced last November. With a market cap of about $100 billion, it's one of the largest REITs in the world.

Houston-based Crown Castle has about 43,000 cell towers of its own in the U.S. It also has a fast-growing collection of about 115,000 cell nodes and 85,000 miles of fiber cable that are a big focus of its efforts to facilitate and capitalize on the 5G rollout. Its market cap of about $59 billion makes it one of the larger REITs in the industry.

Let's look at some numbers

Both these companies went public in 1998. Here's their total return since then, along with that of the S&P 500. Both have easily doubled the broad market benchmark, with the edge here going to Crown Castle.

Chart showing Crown Castle and American Tower beating the S&P 500's total returns since 2010, with Crown Castle leading.

Data by YCharts.

Dividend growth is important when talking about REITs. They're typically viewed for their buy-and-hold potential by income investors looking to enjoy reliable cash flow through market fluctuations that hopefully see share prices rise over time. As you can see below, both these infrastructure REITs have far outpaced the broader market in that regard, too, over the past 10 years.

Chart showing Crown Castle's and American Tower's dividends beating the S&P 500's since 2015, with American Tower leading.

Data by YCharts.

Now, let's look at some more recent numbers. Crown Castle stock is down much more sharply than its rival so far this year, about 33% at this writing, compared with about 25% for American Tower and 16% for the S&P 500. That's due in some part to American Tower's nearly 12% jump in the past month, compared with less than 2% for Crown Castle. So American Tower has an edge there, at least in market sentiment.


Let's also look at funds from operations (FFO), a critical measure of how effectively a REIT uses its operating cash. That includes the money it uses to expand its portfolio and to pay the 90% or more in taxable income it's required to dole out to shareholders as dividends.

As shown below, American Tower and Crown Castle both plateaued there during the height of the pandemic. Since then, the former is growing FFO at a much faster pace. Again, the edge goes to American Tower.

Chart showing Crown Castle's and American Tower's 3-year FFO growth rising since 2020, with American Tower leading.

Data by YCharts.

American Tower also gets the edge in the Price/FFO per share ratio, coming in at about 16 times there versus about 17.7 times for Crown Castle, meaning the latter is a bit more expensive by that measure.

Interestingly, both stocks are now yielding an annualized dividend of $5.88 a share. American Tower has raised its payout for 11 straight years, compared with eight for Crown Castle, and more sharply, at an annualized three-year clip of nearly 18.3% compared with 8.5% for Crown Castle. The former's payout ratio based on cash flow is a modest 55%, compared with 91% for the latter, which bears some watching.

That payout ratio does bear out in the dividend yield to shareholders. Crown Castle gets the nod there and has for some time. It's currently paying about 4.3% at a share price of about $135, while American Tower is at about 2.7% from a share price of about $215 a share. That spread between them has been about the same for quite some time, and both pay more than the S&P 500's yield of about 1.6%.

No wrong choice here, but I'll stick with Crown Castle -- for now

So, which is a better buy right now? There are many investors who made these REITs some of their first-ever stock buys back in the day, and there's good reason to do it again. They're both great companies in a growth industry with a high barrier to entry and rosters of blue-chip tenants -- including all the major mobile carriers -- who can pay regularly rising rents for that essential space.

Both are investing heavily in growing their portfolios, but I particularly like Crown Castle's commitment to small cell nodes and last-mile mini data centers as the 5G network pushes out at the edges. It also lays claim to being the largest provider of shared communications infrastructure in the U.S., a particularly reliable growth market.

I've owned American Tower shares in the past and did quite well. I own Crown Castle stock now and plan to add to my stake. As a recent retiree, the consistently higher yield just adds to its allure for me. And, of course, I can always add American Tower back into my portfolio.