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Crown Castle: Income from Cell Towers
03/25/2016 8:00 am EST
Modern life as we know it wouldn’t function without the presence of cell towers dotting the landscape. Smartphones and mobile devices depend on maintaining connectivity from tower to tower, explains Bryan Perry, income expert and editor of Cash Machine.
Though there is not much that can be done to hide these glaring fixtures, cell towers have become yet another essential utility -- and, at the same time, a valuable investment proposition for income investors.
Of the major cell tower operators that trade publicly, my favorite is Crown Castle International (CCI).
It is the second-largest operator of cell towers, with a $28.2 billion market capitalization and a hearty dividend yield of 4.20% with a history of strong dividend growth.
With a strong focus on domestic operations, I like the fact that there is limited emerging market risk.
CCI owns or leases out 39,600 towers and other forms of antenna structures in the United States and 1,700 in Australia. The company also owns more than 16,000 fiber miles in the United States.
The stock is trading in a fairly broad range and spent most of 2015 gyrating between the low $80s and high $80s.
In the latest quarter, CCI topped estimates by a penny, earning $1.11 per share while quarterly revenues of $945.8 million came in $17.3 million higher than forecast.
In addition, 2016 earnings per share are expected to rise from $4.67 to $5.00, which easily covers the $3.54 per share annual dividend payout and is a very admirable fit to our Safe Haven model portfolio.
It is my view the stock is setting up for a strong upside breakout in 2016 that could easily take the shares up to the $98-$100 level -- implying a total one-year return of around 20%, including dividends.
Editor’s note: Meet Brian Perry at the upcoming MoneyShow in Las Vegas, May 9-12. Bryan will be speaking about his current top 10 stocks and ETFs. To register, click here.
By Bryan Perry, Income Expert and Editor of Cash Machine.
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