American Tower (AMT)

American Tower (AMT-N), Crown Castle International (CCI-N) or SBA Communications (SBAC-Q)? US REITs that own cell towers. You want to own these because they have multiple tenants. The average tower has 3 or 4 tenants. They can put more and more gear on them, so there is lots of room to grow revenues. The US is going through a boom on bandwidth, certainly wireless spectrum. Of the 3, he prefers this, the most international of the group. About 60% of revenue comes from the US and the rest is international. Generates a lot of free cash flow, and is highly predictable because of 5 year contracts. As we move to 5G, there is going to be a whole bunch more gear getting loaded on these towers, allowing them to charge more rent. It doesn’t pay a big dividend, but it has grown 34% a year over the last 5 years.

He loves it, but it is too expensive for him. They took out the number 2 tower company in India. If we got a pullback it would be one of those companies at the top of his list to add to. When the street loves a stock you should sell it. Then we can get in.

A REIT which owns cell phone towers all over the world. Cell phone towers are pretty interesting REITs as they have almost unlimited capacity. They have all the major wireless providers as customers, putting their gear up on their towers. Every time there is a new generation of gear, they don’t take the old stuff off, but put the new one on, so rents keep going up. They’ve done a great job of growing geographically. Has a broad customer base and isn’t levered to any one mobility provider. Over the next couple of years, we are going to start seeing 5G LTE coming, the next generation of wireless gear. They’ll continue to grow their dividend.

They have exposure into India. It is an expensive stock with a low dividend (~2%). He sold it earlier this year. He would not short it.

He really likes this because it is globally focused. It is the largest tower company in the US. These are literally wireless towers, and have long-term agreements with telecommunication companies in the US and globally. Any time there is a migration to a new higher speed technology, effectively the telco has to pay to upgrade all the equipment on the tower. A very visible and predictable business. If you think of data traffic tripling or quadrupling over the next 4-5 years, this is a company that is really going to benefit. This has great long-term growth potential.

It is quite expensive at 50 times earnings. It is a cell tower story that is growing in the US modestly and a lot more internationally. They view a tower as needing as many different tenants as possible. They want to increase acquired towers from 1.5 tenants to over two, where they normally have them.

(Market Call Minute.) In the REIT camp, and a high growth company. Looks quite attractive.

They sell telephone towers, mostly in the US, but globally as well. The company is growing quite nicely. Cash flow growth is at 15%+ in the next few years, and that will drive very solid dividend growth. Very low risk because it is long-term contracts. There is nice structural growth in the industry because some countries are moving from 2G to 3G, etc. That drives more demand for space on their towers.

(Market Call Minute.) They lease their towers back to telecommunication companies under long-term contracts. Have some global exposure. A great way to get a pretty low, but stable dividend.

(A Top Pick Jan 26/15. Down 8.92%.) A real estate investment trust that owns cell towers globally. They lease space to mobile phone operators to put their gear on towers. Have had very, very good cash flow growth. REITs has been a bit of a tougher space over the last year. Not sure he would Buy, but would keep it on the list to buy when the market starts to turn around.

(Top Pick Oct 9/14, Down 6%) They are a REIT but own cellular towers. He moved to tech and consumer.

We all love to hate the towers that are out there, but this company owns about 70,000 of them, mostly in the US. They just picked up another 4,000 international towers. Earnings were up about 13% last quarter. They secured another $649 million in acquisitions. There is a consolidation going on in the industry and this company leads the way. The dividend is only 1.89%, so he is looking at it for capital gain. The dividend did increase 29% last quarter and the company has targeted a 20% dividend growth going forward.

A great house in a difficult neighbourhood. They are not terribly economically sensitive. It is growing its dividend nicely, but is in the REIT sector and gets impacted by the negative view of REITs. Look at big cap technology stocks such as MSFC-O. Healthcare is another sector to go to, as well as financials.

This is a REIT that owns cell towers. About 65% of their revenue comes from North America, so it is fairly domestically focused, although they do have Latin America, India and Germany. It costs them almost nothing to add new capacity. There is very little in the way of capital investment in this business. You can continue to see very strong dividend growth. Yield of 1.49%.

Is actually a REIT. 65,000 towers around the world. Great balance sheet and great management. They are always profitable.