Crown Castle International (CCI) is still sending favorable signals, notes John Dobosz, an industry-leading growth and income investing expert — and editor of Forbes Dividend Investor.
Shares of cell phone tower and data center REIT Crown Castle have returned 27% since their October 2020 addition to the Forbes Dividend Investor portfolio.
The stock is not the screaming value that it was last fall, but it does retain its appeal as a best-in-class company that delivers reliable dividend growth and consistent increases in sales and profits.
Quarterly dividends at their current rate of $1.33 per share have grown at a compound annual rate of 14.3% over the past decade, while funds from operations have chugged higher at a 13% annual pace.
Crown Castle grabbed a big piece of business from Verizon in the first half of 2021, and funds from operations grew 20% year-over-year in the most recent quarter. Revenue this year is expected to grow 7.5% to $6.28 billion.
The ongoing rollout of 5G wireless service is a significant tailwind for CCI and its two primary competitors in the tower business: American Tower (AMT) and SBA Communications (SBAC).
Crown Castle has outperformed its rivals in market performance, with a 24% year-to-date total return through June 16, compared to AMT’s 19% and 13% for SBAC.
Crown Castle has taken advantage of the stock’s strength and the favorable business environment to raise additional capital on advantageous terms by issuing both equity and debt. The most recent transaction was the issue of $750 million in 2.50% senior notes due 2031.
In early June, CCI shares closed at an all-time high of $198.91. The stock is still attractive for long-term investors at current prices near $193. Waiting for a pullback to the 50-day moving average of $185 would get you into the stock at a yield just shy of 2.9%.
