Five Best Cell Tower Stocks to Buy for 5G Growth

Paul Dykewicz

Technology Stocks

Five best cell tower stocks to buy in pursuit of 5G growth opportunities offer investors ways to tap into new high-speed communications technology that should show strong growth in the next several years.

The five best cell tower stocks to buy feature four stocks involved in the cell tower business and an exchange-traded fund focused on 5G generally that includes exposure to cell tower stocks among its portfolio of equity holdings. These five best cell tower stocks give investors a chance to buy shares in a growth area that only has just begun to display its vast potential.

Kevin O’Leary, chairman of O’Shares ETFs and a panelist on the “Shark Tank” television program, said in a recent podcast that 5G will be a “really big game changer” in the sense that any business that wishes to reach out to its customer and form a direct relationship will benefit from using the technology. 

Paul Dykewicz interviews Kevin O’Leary, chairman of O’Shares ETFs and “Shark Tank” panelist

Three Big Trends Support Five Best Cell Tower Stocks to Buy

A recent research report by BoA Global Research identified three primary potential benefits to wireless carriers that 5G offers.

  1. Enhanced Broadband Speeds — 5G users will enjoy speeds in the gigabyte per second (gbps) range, compared to just the megabyte per second (mbps) range today. This dramatically improved speed opens the way for fixed wireless broadband to be provided in a host of emerging applications.
  2. Low Latency — Technology and applications need low latency to enhance the user experience. When consumers reach the next evolution of the Internet of Things, including self-driving cars and virtual reality applications, low latency will become increasingly important.
  3. Supports Internet of Things (IoT) – An increased number of applications and devices will rely on connectivity and 5G will grow the number of sensors from the millions to the billions as the Internet of Things mushrooms.

Pension Fund Chairman Likes Three of the Five Best Cell Tower Stocks to Buy

American Tower Corporation (NYSE:AMT), a Boston-based real estate investment trust that owns and operates wireless and broadcast communications infrastructure in several countries, is one of the three cell tower real estate investment trusts (REITs) recommended by Bob Carlson, chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets. Carlson also leads the Retirement Watch investment newsletter. As one of the largest REITs in the world, American Tower serves as a developer of multitenant communications real estate through a portfolio of approximately 214,000 communications sites.

To tap growth opportunities in Latin America, American Tower announced on June 3 that it closed on a tranche of its Telxius Towers acquisition that consists of more than 7,000 communications sites in Brazil, Peru, Chile and Argentina. The transaction totaled roughly $1.1 billion at foreign currency exchange rates at that time. The closing was funded by a combination of cash on hand and borrowings under the company’s revolving credit facilities and loans.

American Tower’s Chief Executive Officer Tom Bartlett issued a statement saying, “With Telefónica as our anchor tenant partner and attractive opportunities for colocation as 4G and 5G deployments accelerate, we expect to drive strong, sustainable long-term growth and attractive returns in the region, while helping to enhance mobile broadband connectivity for hundreds of millions of people.”

Management’s guidance indicates the assets should generate approximately $70 million in property revenue and $40 million in gross margin for the balance of 2021 and to be immediately accretive to consolidated adjusted funds from operations (AFFO) per share.

Source: Stock Rover. Click here to sign up for a free, two-week trial for Stock Rover charts and analytics.

American Tower’s share price has soared 24.36% in the past three months, 21.05% so far this year and 4.83% in the past year. The company also offers a current dividend yield of 1.9%. 

Chart courtesy of www.stockcharts.com

SBA Communications Secures Spot Among Five Best Cell Tower Stocks to Buy

Another of the five best cell tower stocks to buy is SBA Communications Corporation (NASDAQ:SBAC), a Boca Raton, Florida-based real estate investment trust that owns and operates wireless infrastructure in the United States, Canada, Central America, South America and South Africa. The company received an upgraded rating from Morgan Stanley on June 2 to overweight from equal-weight, along with an 11% price target hike from $337 from $321.

SBA Communications reported first-quarter results that beat estimates for revenues and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). On April 1, SBA Communications entered into an agreement with New York-based 5G provider Verizon Wireless to provide for committed, extended terms under existing lease agreements, as well as equipment-specific pricing and terms for upgrades to Verizon’s existing leased sites.

The stock price of SBA Communications has jumped 20.65% in the past three months, 13.74% since the start of 2021 and 7.50% in the last 12 months. The company also provides a current dividend of 0.7%.

Chart courtesy of www.stockcharts.com

Crown Castle Earns Berth in Five Best Cell Tower Stocks to Buy

Crown Castle International Corp. (NYSE:CCI),  of Houston, owns, operates and leases more than 40,000 cell towers and approximately 80,000 route miles of fiber supporting small cells and fiber solutions across major U.S. markets. Crown Castle’s share price has been surging.

The company’s stock price has zoomed 21.85% in the last three months, 24.49% so far this year and 19.77% in the past 12 months. Crown Castle’s current dividend yield is 2.7%.

Chart courtesy of www.stockcharts.com

The rollout of 5G services will usher in new technologies and mobile experiences, as well as change the way people interact with each other. With the right infrastructure and technology in place, 5G will connect devices at speeds up to 100 times faster speeds with prior communication technologies.

Pension fund and Retirement Watch leader Bob Carlson answers questions from Paul Dykewicz prior to COVID-19-related social distancing.

Money Manager Kramer Chooses One of Five Best Cell Tower Stocks to Buy

“We got into Crown Castle International Corp. a few years ago in my Triple-Digit Trader portfolio because the stock was hot at the time; but in general, investing in cell phone towers is all about the dividends,” said Hilary Kramer, who heads the GameChangers and Value Authority advisory services. “You want to buy at a level that locks in reasonable cash flow and then hang on as long as the underlying business can support competitive yields.”

Kramer recalled recommending the sale of CCI when the stock “ran out of momentum” and better opportunities came along. Today it doesn’t even pay 3% a year in dividends, which Kramer said is generally her lower limit for considering any REIT or other income-generating investment.

“Admittedly, the coming 5G boom means more demand for tower capacity, ensuring that CCI and its counterparts will collect more rent and will be able to expand their shareholder payouts over time,” Kramer said. “CCI is already stretching its funds from operations — the metric I look at with REITs because it determines the pool of cash available for dividends — to raise its distribution 8% a year. American Tower Corp. (NYSE:AMT) and SBA Communications Corp. (NASDAQ:SBAC) carry lower yields today but are growing fast enough to narrow the gap year by year. In fact, if you’re willing to hang around long enough, AMT should actually pay a higher yield than CCI by mid-decade.”

Uniti Group Earns Slot Among Five Best 5G Stocks to Buy

However, none of these stocks will catch Little Rock, Arkansas-based Uniti Group Inc. (NASDAQ:UNIT) and its 5.5% dividend yield payout any time soon, Kramer said. UNIT is smaller and has spent the last few years “under a cloud” after management made the tough choice to sell its Latin American portfolio and cut the quarterly dividend 75% to $0.15 per share.

Now, Uniti Group’s management has plenty of cash to build 5G towers closer to home. For investors who want direct exposure to the boom and reasonable income, Uniti Group is “the place” to invest, Kramer continued.

Chart courtesy of www.stockcharts.com

Uniti Group is a REIT that is focused on the acquisition and construction of mission-critical communications infrastructure such as fiber, wireless towers and ground leases. The business works with its customers in a variety of situations to monetize existing assets through a sale-leaseback transaction, finance greenfield infrastructure development and provide merger and acquisition support for complementary companies. 

The REIT structure of Uniti Group seeks to provide customers with a flexible source of permanent capital for strategic initiatives to let them strengthen and expand the critical communications infrastructure that unifies businesses, consumers and communities nationwide. The company’s share price has fallen 7.98% in the past three months and 5.63% in the year-to-date (YTD) period, but ascended 28.43% in the last 12 months.

Paul Dykewicz conducts a pre-COVID-19 interview with Hilary Kramer, whose premium advisory services include IPO Edge, 2-Day Trader, Turbo Trader and Inner Circle.

Jablonski Champions 5G Fund as Hybrid Choice Among Five Best Cell Tower Stocks to Buy

A fund that contains cell tower stocks is Defiance 5G Next Gen Connectivity ETF (FIVG), said Sylvia Jablonski, chief investment officer of New York-based Defiance ETFs. 5G is the “next generation” of mobile and communications services, Jablonski added.

“5G will allow a digitalized economy, the continued rollout of electric vehicles, support machine learning and artificial intelligence,” Jablonski said in a recent podcast.

Other uses of 5G include real-time medical data for doctors and hospitals. 5G will touch every sector imaginable, Jablonski said.

“It has barely started,” Jablonski said. “There are about 60 countries and 1,300 cities that have 5G — about one-third of where we need to be.”

The compound annual growth rate of 5G is projected to be about 70% between 2020 and 2025, Jablonski said. It is a “massive investment opportunity,” Jablonski continued. 

The Defiance 5G ETF gives exposure to a broad spectrum of companies engaged in the business, Jablonski said. Such companies include cell tower companies, semiconductor suppliers, telecommunications providers and the REITs that house some of the infrastructure buildout, she added.

Chart courtesy of www.stockcharts.com

FIVG, with $1 billion in assets under management, invests in the 5G phenomenon with next-generation innovative and disruptive capabilities.  The ETF is a flagship part of the company and the most cost-effective way to invest in 5G, Jablonski said.

Five Best Cell Tower Stocks to Buy Evade Worst of COVID-19 Crisis

Progress in the COVID-19 vaccination process lifts hope that new cases and deaths will keep falling in the future. A total of 145 million people in the United States have been fully vaccinated from COVID-19. 

With 311 million doses administered in America, 44.2% of the U.S. population had been vaccinated by June 15. In addition, the Food and Drug Administration (FDA) recently approved a third COVID-19 vaccine, manufactured by Johnson & Johnson (NYSE:JNJ), which requires only one dose rather than two, as with the first two vaccine providers.

COVID-19 cases throughout the world have hit 176,642,863 and caused 3,822,685 deaths, as of June 16, according to Johns Hopkins University. Also as of June 16, U.S. COVID-19 cases totaled 33,485,068 and have led to 600,272 deaths. America has the dreaded distinction as the country with the most COVID-19 cases and deaths.

The five cell tower stocks to buy give investors a chance to gain exposure to next-generation communication technology. Increased COVID-19 vaccine availability, an improving economy and the recent $1.9 trillion federal stimulus package should help to lift the five cell tower stocks to buy .

Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street JournalInvestor’s Business DailyUSA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is great as a gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others. Call 202-677-4457 for special Father’s Day gift pricing!

 

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