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SBA Communications' SBAC portfolio is well-positioned to gain from wireless carriers’ high capital spending for network expansion amid growth in mobile data usage. The long-term leases with its tenants assure stable revenues. Also, portfolio expansion moves, domestically and internationally, are encouraging.
Analysts seem positive about this Zacks Rank #2 (Buy) company. The Zacks Consensus Estimate for SBAC’s 2025 and 2026 funds from operations (FFO) per share has moved marginally northward over the past two months to $12.91 and $13.32, respectively.
Shares of this communications real estate investment trust (REIT) company have gained 9.5% so far in the year, outperforming the industry’s rise of 4.5%. Given the strength of its fundamentals, there seems to be additional room for growth.
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Factors That Make SBA Communications Stock a Solid Pick
Robust Market Demand: The advancement in mobile technology, such as 4G and 5G networks, and the proliferation of bandwidth-intensive applications have propelled growth in mobile data usage globally. With increasing smartphone adoption, greater broadband demand and plans for 5G service worldwide, wireless service providers and carriers have been deploying additional equipment for existing networks to enhance network coverage and capacity. This has been spurring the demand for SBA Communications’ wireless communications infrastructure.
Resilient Business Model: SBA Communications has a resilient and stable site-leasing business model. The company generates most of its revenues from long-term (typically five to 10 year) tower leases that have built-in rent escalators. With high operating margins, its tower-leasing business remains attractive. Wireless service providers continue to lease additional antenna space on the company’s towers amid the increase in network use, data transfer, network expansion and network coverage requirements.
During 2025, management expects organic site leasing revenues in both its domestic and international segments to increase over 2024 levels on a currency-neutral basis. This is due in part to wireless carriers deploying unused spectrum, and revenues from towers acquired and built during 2024 and expected to be acquired and built during 2025.
Expansion Efforts: As the company continues to expand its tower portfolio and seek new growth opportunities, it focuses on business expansion into domestic and select international markets with high growth characteristics. In 2024, the company acquired 186 towers and related assets and built 482 towers. Additionally, SBA Communications spent $14.3 million to purchase land and easements and to extend its lease terms during the fourth quarter of 2024.
Following the fourth quarter of 2024, along with more than Millicom’s 7,000 sites under contract, SBA Communications purchased or is under contract to buy 32 communication sites for a total consideration of $14.6 million in cash. Such portfolio expansion efforts will position SBA Communications to leverage secular trends in mobile data usage and wireless spending growth across the globe.
Dividend Payment: Solid dividend payouts are arguably the biggest enticements for REIT shareholders and SBA Communications remains committed to that. In February 2025, the REIT announced a quarterly cash dividend of $1.11 per share on its Class A common stock, indicating an increase of nearly 13% from the prior quarter. The company has increased its dividend five times in the last five years, and its five-year annualized dividend growth rate is 19.75%. Given SBAC’s solid operating platform, decent financial position and a lower-than-industry dividend payout rate, the dividend distribution is expected to be sustainable over the long run.