This Infrastructure Play May Prove One of the Best Income Investments Today

With the stock market down so heavily, traders may feel hit hard. But looking at the market objectively, a big down year leads to lower valuations. And for income-generating investments like dividend stocks, it can mean higher starting yields.

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  • Investors who can buy growing companies with reasonable dividends can likely see both a higher share price and a higher dividend payout when things turn around. One area where investors can get both is in beaten-down infrastructure plays.

    While the term can be vague, infrastructure companies come in all shapes and sizes. One of the top places to invest in the space today is in the cell tower REITs. These specialized investment vehicles use the power of REITs to own cell towers, which are leased out. That makes them landlords for antennas.

    The space has been hit hard. Investors looking for a bargain now may find one in Crown Castle Inc (CCI). Shares are down 26 percent in the past year, even as the dividend was boosted by over 6 percent.

    Like the other tower REITs, Crown Castle has long-term agreements with cell phone companies, and receives automatic price increases every year, which should lead to higher profitability and dividend payouts.

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  • Action to take: Investors should consider accumulating shares here, with a starting dividend yield of 4.6 percent. Rising dividend payouts and a rising share price in the next year should lead to sizeable returns.

    For traders, the April 2023 $165 calls, last going for about $1.70, offer high double-digit return potential in the months ahead as shares come off their recent lows.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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