Crown Castle Stock Up 10.5% Year to Date: Will the Trend Continue?

Crown Castle CCI shares have risen 10.5% year to date, outperforming the industry's upside of 3%.

Crown Castle is poised to gain as wireless data consumption is expected to rise significantly over the next few years, and service providers are likely to continue their network expansion and densification efforts to meet the demand. The company’s long-term leases, with its solid and creditworthy tenant base, assure steady revenues. A strong balance sheet aids future growth endeavours.

On May 22, 2025, CCI announced that its board of directors has declared a quarterly cash dividend of $1.0625 per share. This represents a 32.1% decrease from the previous quarterly payout of $1.565 per share. The company had earlier announced its plan to reduce its dividend payment in the second quarter of 2025 as part of its efforts to increase free cash flow generation and financial flexibility amid the Fiber segment sale move.

Factors Behind CCI Stock Price Surge: Will the Trend Last?

The exponential growth in mobile data usage, higher availability of spectrum and deployment of 5G networks at scale are driving significant network investments by carriers who aim to improve and densify their cell sites.Given Crown Castle’s unmatched portfolio of more than 40,000 towers in each of the top 100 basic trading areas of the United States (as of the first quarter of 2025), it remains well-positioned to capitalize on this upbeat trend.

Moreover, wireless data consumption is expected to increase considerably over the next several years, driven by the advent of next-generation technologies, including edge computing functionality, autonomous vehicle networks and the Internet-of-Things, and the rampant usage of network-intensive applications for video conferencing and cloud services and hybrid-working scenarios. In effect, in the first quarter of 2025, excluding the impact of Sprint Cancellations, the company reported 5% consolidated organic growth, which was driven by an increase in demand across its portfolio of tower businesses. Management expects a solid, stable level of demand for its tower assets in 2025.

Crown Castle’s strong internally generated cash flow, supported by its tower segment, is impressive. The wireless tenant contracts have an initial term of five to 15 years, with contractual escalators and multiple renewal periods of five to 10 years each, which the tenant can exercise at their discretion. Such long-term leases enable the company to enjoy recurring revenues that provide top-line stability, while contracted rent escalators on the majority of its revenues offer embedded growth. Moreover, a strong and creditworthy tenant base adds resiliency to its business.

Crown Castle has sufficient liquidity and a decent balance sheet position. The company exited the first quarter of 2025 with cash and cash equivalents of $60 million. As of March 31, 2025, the net debt to last quarter annualized adjusted EBITDA was 5.9X. After closing the fiber segment business, the company expects to use substantial cash proceeds to repay debt.

As of March 31, 2025, CCI had $7 billion of undrawn available under its senior unsecured revolving credit facility. Further, as of the end of the first quarter of 2025, Crown Castle enjoyed investment-grade credit ratings of BBB, BBB+ and Baa3 from Standard & Poor’s, Fitch, and Moody’s, respectively, facilitating access to debt markets on attractive terms.

Key Risks for CCI Stock

Crown Castle’s top-line growth is likely to be affected by the consolidation in the wireless industry. High customer concentration and elevated interest expenses are other key concerns.

Analysts seem bearish on this tower REIT, carrying a Zacks Rank #3 (Hold), with the Zacks Consensus Estimate for its 2025 FFO per share being revised southward by 7.7% over the past week to $4.18.

Stocks to Consider

Some better-ranked stocks from the broader REIT sector are VICI Properties VICI and W.P. Carey WPC, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for VICI Properties’ 2025 FFO per share has been raised marginally over the past two months to $2.34.

The consensus estimate for W.P. Carey’s current-year FFO per share has moved marginally northward in the past month to $4.88.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

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