While the U.S. mobile communications market is fairly developed, Crown Castle believes it still has ample growth ahead as the industry pivots to 5G. The company noted in a recent press release that "through our investment of approximately $30 billion over the last ten years, we have built a unique portfolio of assets, unparalleled capabilities, and strong customer relationships that position us well to capture the upside of the anticipated decade-long investment cycle required to meet the increasing demand for mobile data and deploy 5G in the U.S." Thus, given that statement, we can infer that Crown Castle will be a much more 5G-focused company by 2030 as it invests in the buildout of more small cells and fiber cable.
This infrastructure will be crucial to supporting increased mobile data usage in the country. The small cells built on existing structures like streetlights and utility poles will help relieve wireless congestion, while fiber cables will help move data quickly across the network. Meanwhile, the company's existing macro cell tower network will remain vital for handling voice calls and data, which should keep this infrastructure in high demand.
Crown Castle believes that this decade-long investment in 5G will support steady growth in its FFO and dividend. The company estimates that it should be able to grow its already above-average payout by 7% to 8% per year over the long term. Thus, investors who buy shares today should collect a steadily rising income stream in the decade ahead. Further supporting Crown Castle's ability to grow is its investment-grade balance sheet and relatively conservative dividend payout ratio, which typically averages around 75% of its annual FFO.
The REIT's current strategy focuses solely on the U.S. mobile market. However, Crown Castle International could once again live up to its full name by expanding into international markets. Its publicly traded peers, American Tower (NYSE: AMT) and SBA Communications (NASDAQ: SBAC), have extensive international operations, which has enabled them to outperform Crown Castle's stock in recent years. Because of that relative outperformance, an activist investor is currently putting pressure on Crown Castle to rethink its capital allocation strategy, including its investments in fiber. If investors persuade the company to shift its focus, a pivot toward international growth might be one of the changes.