A Towering Portfolio Candidate

Usage of cellphones and smartphones is still growing rapidly around the world. So telecom companies need to keep adding broadcast equipment to handle the traffic, and that means more equipment on structures like cell towers and rooftop spires.

If you’d like to profit from this scenario, consider American Tower (NYSE: AMT), with a dividend recently yielding 2.1 percent. It’s a real estate investment trust (REIT) that’s one of the world’s largest owners of towers and other structures designed to hold telecommunications equipment. As telecom companies would generally rather not have to spend money building towers or buying land, American Tower can lease space to multiple clients on the same structure. This has been a lucrative arrangement, as the company has grown its bottom line by an average of 16 percent annually over the past decade.

Of American Tower’s 170,000 or so communication sites, only 40,000 of them are in the U.S. Management is investing heavily in fast-growing markets such as India and Nigeria, where wireless data usage has been increasing at a far faster rate than in the U.S. Also, as more mature wireless networks start the commercial rollout of 5G, telecom companies will likely be renting more space on existing infrastructure. (The Motley Fool owns shares of and has recommended American Tower and has the following options on it: short October 2018 $135 calls and long January 2019 $80 calls.)