A High-Growth REIT for the 5G Future

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It’s a difficult time to become an income investor.

Bond yields are still close to historically low levels and could fall further. A stranger happened.

However, rising bond yields have been a trend in recent months.

10-year Treasury bonds up 45 basis points from August lows

And as the Federal Reserve Board promises to curtail $ 120 billion in bond purchases each month, the main source of bond purchases is about to slow significantly.

If all other conditions are the same, a higher bond yield means a lower bond price … and a lower price for the dividend stock that has come to act as an alternative to the bond. ..

Therefore, the ideal dividend stock in this environment is one with a fairly high current yield, but more importantly, a growing business that can stay one step ahead of the rise in yields.

Where is it Crown Castle International Corporation (NYSE: CCI). Come in.

Crown Castle: REITs that can break bonds

Crown Castle Real estate investment trust (REIT), but it is not a conventional one. Rather than owning an apartment or office building, we own a network of over 40,000 cell towers and 80,000 route miles of fiber optic cable.

The story of growth here tells itself. Do you think mobile phones and other devices will use mobile data more or less than they do now in five years?

Yeah, that’s what I thought. Me too.

Crown Castle has a competitive dividend yield of 3.3%. This is not a gambling scam, but keep in mind that the 30-year US Treasury yield is only 2.1% and the 10-year is about 1.6% just behind it.

Unlike those government bonds, Crown Castle will need to raise its payments over the next few years. The company raised its dividend by 11% in December last year and 7% in the previous year. The company has raised dividends every year since it started paying dividends in 2014.

A quick glance at the Green Zone Rating System may result in a pause. Crown Castle’s share price is rated “bearish” with 36 out of 100.

Crown Castle Stock Price

But the devil is always in the details, and Crown Castle appreciates wherever it wants to be in this environment.

growth — — CCI is Solid 91 of our growth factors, This means the company is growing with a faster clip than all but 9% of our space stake. I don’t know why it’s going to be late soon. Telecommunications is a saturated market in most parts of the world, but more towers are needed each day to accommodate the rollout of 5G services. Crown Castle is part of that solution.

Volatility — — Inventory is stable while the company grows like weeds. Rated 68 in volatility factorThat is, it is less volatile than more than two-thirds of our space stocks. That’s what we’re looking for in income stocks. By pursuing a 3% dividend, we don’t want to risk the upset volatility.

Momentum — Crown Castle rates a medium 50 due to our momentum factor. Obviously no exception here, but still average. I’m fine with that. With strong growth and stability, you don’t need a rock star with momentum as a dividend stock.

Quality- REITs are penalized for our quality factors. Weird accounting pushes down reported returns, and REITs most often have a lot of debt.Again, CCI is no exception, but nonetheless Evaluate an average of 47 with our quality factor..

worth — — The same applies to value. Traditional value indicators tend to penalize REITs, Crown Castle rates low 9 on our value factor.. This is not a cheap REIT, but you need to understand that REITs tend to be enthusiastic about accounting and get their factor score here.

size — — Crown Castle is a large REIT with a market capitalization of $ 77 billion (total number of issued shares multiplied by current market value). Yes, Evaluation of the 7 sizes Not surprising.

Conclusion: Crown Castle has spent the past few months in fix mode and seems to have found a bottom in mid-October. Last week it increased by about 7%.

CCI is bouncing back

Crown Castle Stock Chart

At current prices, we are earning solid REITs in growing industries and abandoning competitive dividends. I have a lot of things I like here.

For safe benefit

Charles Sizemore_Sig

Charles Size More

Co-editor, Green Zone Fortune

Charles Size More Is a co-editor of Green Zone Fortune Specializes in income and retirement topics. He is also a frequent guest on CNBC, Bloomberg and Fox Business.

A High-Growth REIT for the 5G Future Source link A High-Growth REIT for the 5G Future

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