The demand for mobile towers is expected to keep rising along with the release of 5G wireless networks. By one estimate, the global 5G market that was at $41.48 billion last year is expected to see a compound yearly growth rate of 46.2% through the year 2028. There are numerous ways to invest in the wireless communications market, including the main cellphone companies. Let’s look at the mobile tower companies that the carriers use.
These three companies are real estate investment trusts, and all three combined own more than 75% of that vital infrastructure domestically.
American Tower is the biggest of all REITs
American Tower has been in existence since 1995 and has expanded into the biggest of U.S. REITs by market capitalization, at almost $130 billion. The company operates and owns over 183,000 communications sites around the world, as well as outdoor distributed antenna systems, in-building systems, managed rooftops, and services that speed up the rate of network deployment.
The company has expanded through acquisition and organically, most recently with the company purchasing the data center REIT CoreSite Realty, which adds multichannel integration and diversification to AMT’s portfolio, especially with its cloud storage capabilities.
AMT’s share price has increased by 186% over the last five years and is also yielding 1.91% from a dividend it has increased every quarter since the beginning of 2012, not too long after it became a REIT.
In its 3Q21 revenue call, the company stated it thinks mobile data usage will grow over 25% in the next five years, and the tenant billings to increase in the mid-single-digit range every year in the United States and higher abroad through the year 2027. Altogether, this means AMT traders can reasonably expect additional growth in share value and payout going forward.
Crown Castle grows its stake in all major U.S. markets
Along with around 40,000 cell towers, the portfolio of Houston-based Crown Castle has about 80,000 route miles of fiber and 80,000 small cell nodes and, and the company also claims a presence in all large U.S. markets.
In their October 21 earnings call, Jay Brown, Crown Castle CEO said that his company was hitting a “record level of activity” in not just the new upgrades of thousands of cell sites as part of its 5G rollout but also the tower co-location work that’s being done with DISH Network as that business builds a countrywide 5G network from nothing.
Crown Castle’s share price and yearly dividend payout have both skyrocketed in the last five years, from about $73 per share in mid-Dec. 2016 to about $200 presently, with $3.00 per share in dividends to $5.88 today, hikes of around 180% and 96%, respectively.
Brown said Crown Castle is “in a great position to capitalize on both the current environment and to increase our dividends and cash flows per share in the short term and for years into the future.” If that happens, that would be great news for buy-and-hold investors who get in now.
SBA Communications predicts high leasing demand in 2022 and beyond
SBA Communications has been here since 1989 as an operator and owner of wireless communication infrastructure, including buildings, rooftops, towers, small cells and distributed antenna systems in 14 markets throughout South Africa and the Americas.
In their 3Q2021 earnings call on November 1, CEO Jeffrey Stoops stated the company was seeing a record in service earnings and leasing and services backlogs at a multiyear high. He stated the company predicts “elevated leasing activities in the U.S. to remain through next year and perhaps longer.”
The stock price has almost quadrupled in the last four years and now has a price/revenue ratio of around 140, compared with S&P 500 which has ratio of 30. The dividend, meanwhile, has been increased 57% in the last two years from $0.37 to $0.58 per share, but it is still a highly expensive stock.
Author: Scott Dowdy