Real estate investment trusts (REITs) have not fared particularly well in 2020 as a result of the COVID-19 pandemic. Some real estate sectors have done better than others, with offices and hospitality properties struggling the most. People have been relying more on technology to communicate as a result of the stay at home orders. As a result, cell tower REITs have done very well despite the economic downturn. In this article, we’ll discuss the best cell tower REITs on the market.
The Development of 5G Technology
The cell tower REIT sector has grown dramatically as 5G technology has become more widespread. 5G was introduced in the US in 2019 as the successor to 4G network technology. It provides faster download speeds and much more bandwidth.
The existing 4G network does not have enough bandwidth to support 5G devices. Networks will need to build a huge number of towers to support 5G devices. Because of this, cell tower REITs have been very successful this year. Telecommunications companies don’t typically own their cell towers – instead, cell tower REITs own them and lease them out to the network providers that need them.
Since 5G networks allow for such a drastic increase in download and processing speeds, we can expect to see them power a number of new technologies in the years to come. These might include self-driving cars, smart cities, military technology, and more. 5G network providers are likely to see drastic increases in expansion, demand, and market performance. In this article, we’ll talk about four key cell tower REITs that investors can use to take advantage of this 5G technology growth.
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Best Cell Tower REIT To Buy
American Tower Corporation (NYSE:AMT)
American Tower is the largest international cell tower REIT. This company currently has towers in 20 different countries across 3 different continents. This means they can benefit from 5G technology expanding to developing countries around the world. American Tower has a portfolio of 181,000 international towers, with over 40,500 towers in the US alone. This makes American Tower the largest cell tower ownership company in the US as well.
After a quick downturn in the month of March 2020, American Tower made up their market losses by April. American Tower now has a market cap of $98.7 billion. Analysts are predicting a huge increase in returns for next year as American Tower takes advantage of the 5G trend. They currently have strategic relationships with companies like T-Mobile.
American Tower’s share price has gone down slightly since April. This means that it could be a great time for investors to buy before prices go back up. The size and breadth of American Tower means they’re likely to continue performing well regardless of the current market climate.
SBA Communications Corporation (NASDAQ:SBAC)
SBA Communications is another regionally diversified REIT. The company leases and develops wireless infrastructure including wireless towers, small cells, antenna systems, and more for use by wireless broadband providers. SBA Communications operates in the US and its territories as well as Canada, Central America, South America, and South Africa. The company owns over 40,500 towers, with 30,000 towers across North and South America alone. Brazil is the country with the most towers, with over 10,000 sites. This tower ownership business has a current market cap of $29.76 billion.
SBA Communications is the newest publicly traded REIT in this real estate sector. With a slight downturn in March as a result of the coronavirus pandemic, SBA quickly recovered and reached their highest market value since going public. This reflects consistent growth for the past three quarters leading up to the fall of 2020.
Since September, SBA stock has trended slightly downward. The stock was briefly overvalued as investors put their money into the tech sector at the beginning of the pandemic. They’ve recently hit a better price target, so this is a great pick for investors looking for stocks that will continue to perform well for the foreseeable future.
High Yield Cell Phone Tower REIT
Crown Castle International Corp. (NYSE:CCI)
As the main competitor to American Tower Corporation, Crown Castle International is the second-largest REIT in the telecommunication infrastructure sector. Crown Castle is based in the US and currently has over 40,000 tower locations. Additionally, Crown Castle has nearly 80,000 route miles of fiber supporting small cells and fiber solutions.
Geographical diversification isn’t Crown Castle’s strong point, but the company has a significant of its resources to 5G upgrades. Crown Castle provides communications infrastructure for many of the largest publicly traded cell carriers, including T-Mobile. The two companies recently launched a strategic partnership to produce more 5G network towers.
Crown Castle currently has a market cap of $66.45 billion. They have one of the highest dividend yields for a cell tower REIT, with a yield of 3.45%. Crown Castle saw a short dip in March and returned to their pre-pandemic performance by April. While their stock has gone down slightly since April, the company makes for a great buy for investors looking for real estate investments in the 5G space.
Cheap Cell Tower REIT
Uniti Group Inc. (NASDAQ:UNIT)
Uniti Group is the cheapest buy on this list of cell tower REITs. After selling the majority of their towers, they turned around and purchased 450,000 fiber strand miles. Uniti Group’s holdings now consist of 1.8 million fiber strand miles and 186 cell towers. The majority of the company’s profits come from rent payments or sales from their fiber strands. Wireless networks across the country make use of these strands.
Uniti is the cheapest REIT on our list, with shares trading around $12. The company’s market performance has struggled in the past three years, which is likely due to selling off their towers. Since many investors are focused only on cell towers, this REIT might fly under the radar. As 5G networks become more essential to our modern infrastructure, Uniti will likely perform extremely well.
Should You Buy Cell Tower REITs?
There’s huge growth potential for cell tower REITs, both in the US and internationally. With the dawn of 5G, the true capabilities of modern bandwidth technology are truly unknown. The performance of these REITs in recent years shows just how reliable these network investments are.
Additionally, it’s unlikely that any new technology would interfere with the success of 5G towers moving forward. While other sectors like retail and hospitality have struggled, cell towers have been successful during the pandemic. Regardless of current events, we’re always going to rely on our cell phones to communicate, which makes them a great long-term investment.
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Cell Tower REITs: Final Thoughts
It’s not just cell phone providers who are starting to realize the huge potential of 5G networks. Companies like Dish Network are even starting to invest in 5G distribution tower sites. The price per share of these REITs has steadily climbed with increased tower activity, and network spending has never been as high as it is today. Investors won’t want to miss out on this hot sector as it will likely be a huge part of our high-tech, developing economy.