Crown Castle International Corp Is Still Bill and Melinda Gates’s Favorite 5G Stock

Crown Castle International Corp: 5G Stock Loved By Bill Gates Up in 2020Crown Castle Stock Up 20% in 2020

Crown Castle International Corp (NYSE:CCI) stock has been one of the best-performing 5G stocks in 2020. Since the COVID-19-fueled meltdown in February and March, Crown Castle stock has rebounded, advancing 20% year-to-date and 27.2% year-over-year. And it remains bullish, having hit a new 52-week high of $175.63 on June 3.

Crown Castle’s long-term growth potential is not lost on Wall Street or the brightest minds in the tech industry.

A provider of small-cell antennas that help connect the cloud computing infrastructure, CCI stock is Bill and Melinda Gates’ favorite 5G stock. They have 5.3 million shares of Crown Castle stock in their foundation’s portfolio.

In August 2019, those shares were valued at $695.1 million. (Source: “Bill and Melinda Gates Foundation Form 13F,” U.S. Securities and Exchange Commission, August 14, 2019.)

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Today, those shares are worth a whopping $930.8 million. So, in less than one year, the Bill and Melinda Gates Foundation has seen their investment in Crown Castle International soar approximately 34%.

That could be just the beginning too; 5G technology is only really starting to be adopted around the world. Because 5G networks use mid-band and higher-frequency airwaves, they need more equipment, cell towers, and fiber-optic wiring. All of which Crown Castle is a leading provider of.

CCI Stock Overview

Crown Castle International is the country’s largest provider of shared communications infrastructure. Its 5G infrastructure currently consists of more than 40,000 cell towers, about 70,000 small cell nodes, and approximately 80,000 route miles of fiber, giving it a commanding presence in every major U.S. market. (Source: “Investors,” Crown Castle International Corp., last accessed July 6, 2020.)

When people think of 5G, they often think of small cell nodes. CCI’s small cell nodes are located to existing infrastructure, like utility poles, streetlights, or signposts. Small cell nodes work with cell towers (which are fiber-fed) to increase and support the fast speeds and increased bandwidth that smart applications and new technologies that rely on 5G.

In February 2014, Crown Castle officially became a real estate investment trust (REIT). As a REIT, the company is legally obligated to distribute at least 90% of its taxable income to investors in the form of dividends.

In May, the company announced that its board of directors declared a quarterly cash dividend of $1.20 per common share. CCI has raised its annual dividend payout every year since 2014. (Source: “Common Stock Dividend History,” Crown Castle International Corp, last accessed July 6, 2020.)

Chart courtesy of StockCharts.com

Strong First-Quarter Results

On April 29, Crown Castle announced its financial results for the first quarter ended March 31, 2020 and maintained its full-year 2020 Outlook.

Jay Brown, CEO commented, “In the first quarter, we delivered strong results that were in line with our expectations, positioning us to generate attractive growth in cash flows and dividends per share for full year 2020.” (Source: “Crown Castle Reports First Quarter 2020 Results and Maintains Outlook for Full Year 2020,” Crown Castle International Corp, April 29, 2020.)

“Our business continues to perform well during this period of unprecedented uncertainty with COVID-19, and we are focused on taking the appropriate steps to deliver on our long-term annual dividend per share growth target of 7% to 8%,” Brown concluded.

Metric Q1 2020 Q1 2019 Year-Over-Year Change
Site Rental Revenue $1.3 Billion $1.2 Billion +5%
Net Income $185.0 Million $193.0 Million -4%
Income Per Diluted Share $0.38 $0.40 -5%
Adjusted Earnings Before Interest, Taxes, Depreciation, & amortization (EBITDA) $814.0 Million $804.0 Million +1%
Adjusted Funds From Operations (AFFO) $593.0 Million $588.0 Million +1%
AFFO Per Share $1.42 $1.41 +1%

AFFO is a financial performance measure used by REITs that is similar to cash flow per share, and it is a good way to better understand a REIT’s profitability.

“The performance of our business during this period of significant disruption highlights the durability in the demand for our critical communications infrastructure and the strength of our strategy,” said Dan Schlanger, CFO. (Source: Ibid.)

2020 Guidance

For fiscal 2020, Crown Castle International expects to report the following:

Metric 2020 Midpoint Year-Over-Year Change
Site Rental Revenue $5.33 Billion to $5.38 Billion +5%
Net Income $998.0 Million to $1.1 Billion +21%
Adjusted EBITDA $3.47 Billion to $3.52 Billion +6%
AFFO $2.57 Billion to $2.61 Billion +9%
AFFO Per Share $6.12 +8%

Analyst Take

Crown Castle International Corp is well positioned to maintain its title as the country’s leading provider of shared communications infrastructure.

The 5G champion has a strong balance sheet and is set to continue navigating the current environment while investing in new assets that it believes will add to long-term capital gains and dividend growth.