Crown Castle International (NYSE: CCI) has been a spectacular wealth creator throughout its history. The infrastructure real estate investment trust (REIT) has generated a roughly 1,760% total return since its initial public offering in 1998, blowing well past the S&P 500's approximately 505% total return during that time frame. Put another way: Crown Castle has grown a $10,000 investment at its IPO into more than $186,150 compared to roughly $60,430 for that same amount invested in the S&P 500.
If Crown Castle can maintain its market-crushing pace, it could eventually turn a modest investment at its IPO or even today into $1 million in the future. Here's a closer look at what would need to happen for the company to become a millionaire maker.
The math to $1 million
Any investment has the potential of growing into $1 million given enough time. As a baseline, the S&P 500 has historically compounded a $10,000 initial investment into $1 million over 46 years, assuming it produces a 10% annual return. Increase the rate of return, and an investment can mint millionaires even faster.
For example, Crown Castle is currently well ahead of the S&P 500's pace, having generated a 13.7% annualized total return since its IPO. If it can maintain that rate, it can grow that same $10,000 into $1 million in about 34 years.
A look at Crown Castle's millionaire-making potential
The key to Crown Castle's success over the years has been its ability to build communications infrastructure to support mobile voice, data, and video transmission across America. It has helped mobile carriers roll out next-generation communications networks by developing and acquiring cell towers that it leases under long-term contracts.
The industry is currently upgrading to its latest network: 5G (fifth generation). Crown Castle is helping lead this rollout, which will utilize existing macro cell towers along with small cell sites and fiber optic cable. For example, it recently signed a deal with Verizon (NYSE: VZ) to develop 15,000 new small sites over the next four years to support its 5G deployment. Meanwhile, DISH Network (NASDAQ: DISH) agreed to lease space on 20,000 communications towers and its fiber-optic assets to facilitate its nationwide 5G network.
Crown Castle is still in the early innings of this investment phase, which it expects will be a decades-long cycle. It estimates that these investments will grow its funds from operations (FFO) per share at a high enough rate to comfortably support 7% to 8% annual dividend growth. Add that to a dividend that already yields nearly 3%, and the REIT could generate total returns of at least 10% to 11% per year for the next decade.
Crown Castle should be able to continue expanding well after the initial deployment of 5G since the industry is already working on 6G. It's at least a decade away from having that technology ready, which could yield another decade-long investment cycle.
In addition to supporting network expansions and upgrades in the U.S., Crown Castle International could once again live up to its name by venturing overseas (it sold its Australian operations in 2015). That could enable it to grow even faster and earn even higher investment returns. That's because most international towers only have one tenant, allowing third-party infrastructure operators to add more and boost revenue.
Meanwhile, Crown Castle could diversify into other data infrastructure operations, such as data centers. That could give it another growth driver to potentially accelerate its FFO in the coming years.
Lots of growth ahead for this infrastructure REIT
Crown Castle currently has a decades-long investment opportunity ahead as it helps to build out the nation's 5G network. That should give it the power to continue producing double-digit total returns. Meanwhile, it has multiple avenues for future growth beyond that as it supports next-generation network upgrades in the U.S. and potentially expands overseas or gets into other adjacent data infrastructure segments. Add it all up, and Crown Castle certainly looks like it has the potential of minting millionaires at a faster pace than the S&P 500.