Thanks for your kind wishes (and patience) as I took a couple weeks off with my family — we had a wonderful and relaxing getaway in a few of the jewels of the Rocky Mountains as we toured through some northern national parks, most of them blessedly devoid of cell phone service or wifi, but now it’s back to real life.
It’s been a few weeks since I’ve written to you about the Real Money Portfolio, though yesterday I did mention briefly that I added the CBD stock Charlotte’s Web (CWEB.TO, CWBHF)to the portfolio. So… what’s up?
Well, other than the continuing lofty valuations almost everywhere thanks to investor exuberance and the Federal Reserve (ultra-low interest rates depress the value of time and cash, so people will pay more for future growth, sometimes ludicrously more), we’ve heard quarterly earnings updates from a bunch of holdings… let me start by sharing my take on a few of them.
Crown Castle (CCI) — earnings were solid from this highest-yielding member of the cell-tower REIT triumvirate, and, better yet, they raised their expectations for the year. If we get 8% dividend growth, which is probably a little aggressive (they expect AFFO growth of 8% this year, 7-8% annually into the future), then the forward dividend would be $4.86 when they raise it next (which would be at the end of this year). Therefore, a 4% forward yield would be achieved by buying below $122… which seems eminently reasonable to me given the investments they’ve made in being ready for small cell demand from 5G (and continuing increased demand for 4G data, which will keep their towers full for years).
The T-Mobile/Sprint merger continues to represent an unknown, and that’s getting close to approval, but, as I’ve noted before, my earlier assessment that this would pressure CCI shares was clearly wrong — and it might be that the sale of wireless network assets to Dish Network (DISH) creates another customer for Crown Castle in the future (DISH shareholders are not so thrilled about the money they’re spending on this, but that doesn’t mean they’ll stop spending).
Probably the most optimistic part of the earnings call was CEO Dan Schlanger’s focus on the small cell business, which is the network of fiber-connected small cell locations that’s seen as being critical to 5G network rollouts (5G signals don’t travel far, so the ...