5G is the most important tech development of the new decade. And like any other technological breakthrough, it’s an opportunity to cash in. Ericsson (NASDAQ: ERIC) released a study on 5G in 2017 showing it could create as much as $1.3 trillion in extra revenue for companies by 2026.
That might sound like our phones will just stream videos a little faster, but that undersells the potential here.
The Wall Street Journal says 5G is already clocking in speeds that are as much as 100 times faster than current 4G networks.
Think of a constant, high-speed Wi-Fi connection wherever you go. A connection that will allow driverless cars to connect to the servers that power them.
Or think about surgeries conducted remotely. And, of course, our video streaming will be unrivaled.
Make no mistake: This is the investment opportunity of a lifetime.
You can cash in by investing in the companies that will best harness this powerful new tool. Or maybe the tech firm whose vision can be realized now that speeds have caught up to its plans.
Those are all excellent strategies.
But another way to cash in is to invest in the gatekeepers behind the network.
This real estate investment trust (REIT) owns the cell towers that make our mobile connections work. It is one of the leaders of the current 4G system, and it’s best positioned to transition right to 5G.
In fact, it just signed a contract with AT&T Inc. (NYSE: T) to handle its 5G network…
The 5G REIT Will Be the Backbone of Our High-Speed Connection
American Tower Corp. (NYSE: AMT) is going to be an excellent backdoor play into 5G. It’s already a leading 4G tower provider that has first-mover advantage in supplying 5G towers. As we mentioned, the company also signed a deal with AT&T in September to power its 5G rollout. AMT already owns and leases about 170,000 towers worldwide, so it has the land and resources to convert to 5G in a hurry.
The Global Telecom Tower Market was valued at $39.47 billion in 2018 and is projected to reach $114.06 billion by 2026, according to Verified Market Research. That is a big pie, and it’s ready to be captured by a company with a head start – like AMT.
The company’s largest international exposure is in India, where data usage has doubled year after year. Wireless carriers have been increasing spending by large amounts to improve their networks.
What’s even better for investors is that AMT operates as a REIT, so the majority of its earnings must be passed along to shareholders in the form if dividends. American Tower currently pays out $1 a share in quarterly dividends, and it’s tripled its dividend over the last six years. It’s always a good sign when a company raises its payouts as it earns more on its bottom line.
American Tower CEO Jim Taiclet said last summer that 5G is not only a game changer for society but that it will “lengthen and strengthen” the company’s growth rate. From Money Morning’s perspective, 5G and the Internet of Things (IoT) are clearly part of one of the megatrends that will create trillions of wealth over the coming years.
AMT stock jumped 8.3% Tuesday as its peers benefitted from merger news from Sprint Corp. (NYSE: S) and T-Mobile US Inc. (NASDAQ: TMUS). That puts it at a new 52-week high and an 11.5% gain year to date. Traders note that it is stretched a bit thin here, so it may need a little time to rest. But overall, this stock is in a bull market with strong investor demand. If 5G lives up to its hype – and there’s no reason to think it won’t – then American Tower has a bright future.
— Money Morning Staff