International Crown Castle (NYSE: CCI) presents the classic argument in favor of a buy and hold: a solid company with an excellent track record in a growing market. And there are reasons to believe that growth could be particularly strong for this real estate investment trust (REIT).
Over the past 10 years, a $10,000 investment in this major player in the cell tower industry would have reached approximately $38,600 – a compound annual growth rate of approximately 14.5% – and it reports currently around 3.5% after increasing its dividend for seven years. consecutive years.
Additionally, after hitting an all-time high of $208.74 per share on December 31, Crown Castle shares have fallen almost 20% and are now trading at around $172. Sounds like a good deal to me.
Price alone doesn’t do that Infrastructure REITs a good buy, but many other factors make it so, especially its commitment to deploying 5G technology well beyond the reach of those tall towers while also embracing emerging technologies.
A big company in small cells
Crown Castle has over 40,000 cell towers across the country, a network that has grown with the deployment of mobile phones themselves. The company also has access to more than 10,000 rooftop sites to expand coverage in areas where towers won’t work, such as dense urban areas.
What’s really fueling its growth now are small-cell nodes, those low-power antennae — typically installed on streetlights and utility poles — needed to support the dizzying expansion of the Internet of Things, self-driving cars, augmented reality, networks of remote transmitters, monitors and a myriad of other devices.
There is also a growing demand for high capacity cables for indoor, outdoor and mixed-use areas. In total, hundreds of thousands of additional small cell nodes will be needed nationwide over the next several years, according to the company. It is also now investing in technologies such as Citizens Band radio service and edge computing, which involves placing small data centers near cell towers and small cell networks.
Crown Castle already has more than 110,000 small cell nodes in place and an order book of another 60,000, and plans to install 10,000 a year in what CEO Jay Brown calls “a significant transition year.” for our small cells and our fiber business”.
Fiber optic cable is also an essential part of this deployment and Crown Castle already has 80,000 miles of it. The company is perfecting its use of micro-trenching, in which a trench as small as two inches wide is used to unroll the fiber.
Growing dividends too
Crown Castle also says it will use its track record to reward shareholders for their investment. Brown said in its first quarter 2022 earnings report that the company expects to deliver 7% to 8% annual dividend growth even if it allows the deployment of 5G across the country.
As shown in the chart below, Crown Castle has more than tripled its dividend payout over the past 10 years, easily exceeding the S&P500 in full return.
Building towards more imposing growth
Crown Castle is in an excellent position to thrive, with a dominant and specialist presence playing a crucial role in an industry marked by the relentless thirst for more digital capability and faster movement of data.
I particularly like the expansion into small cells and edge networks, as well as the continued growth in revenue from its traditional cell towers, which the company expects to see grow by 6% this year, which is at the forefront of the industry.
The company is not without competition, in particular from American Tower. But between the two, I lean towards Crown Castle because of its focus on the growing US market and the diversity of its growth strategies. I own it now and plan to add more in the future.
10 stocks we like better than Crown Castle International
When our award-winning team of analysts have stock advice, it can pay to listen. After all, the newsletter they’ve been putting out for over a decade, Motley Fool Equity Advisortripled the market.*
They have just revealed what they believe to be the ten best stocks for investors to buy now… and Crown Castle International was not one of them! That’s right – they think these 10 stocks are even better buys.
* Portfolio Advisor Returns as of June 2, 2022
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.