After a 32% Dividend Cut, This Stock Is a Buy

Crown Castle is selling its fiber business, and we think this will benefit shareholders. The fiber assets were capital-intensive, yet fiber and small cells only generated one-third of revenue and one-fourth of operating income. After the sale, the company will be able to focus on its solid portfolio of 40,000 US towers and realize their favorable economics: minimal incremental investment needs, annual rent escalators, and a high degree of operating leverage that translates to meaningful free cash flow generation. We expect Crown Castle to deliver steady results following the fiber sale. However, the sale also brings a 32% dividend cut as the company better aligns its payout to its streamlined business. With the dividend cut behind it, a more focused future, and shares trading at a 25% discount to our fair value estimate, we think this REIT is a buy. Crown Castle appears on this month’s list of The Best REITs to Buy. It’s also one of Morningstar Chief US Market Strategist Dave Sekera’s 5 Stocks to Buy Before Everyone Else Piles In.

Crown Castle’s tower business is fantastic. Its portfolio requires minimal capital investment to drive growing cash flow. Wireless carriers lease space on towers to install antennas and other communication equipment to power their networks. Fixed annual rent escalators of roughly 3% provide a baseline for growth. On top of that, carriers regularly add new equipment to tower sites, requiring amendments that increase rent. Finally, Crown can often locate more than one carrier on a tower, providing meaningful operating leverage. If a tower requires incremental infrastructure to support new equipment, the carriers frequently agree to prepay some rent to fund this investment. Consumers’ mobile data consumption is steadily expanding, and we expect towers will continue to provide the foundation on which mobile communications networks depend. We think Crown’s plans to divest its fiber assets will benefit shareholders over the long term, as this business’ returns on invested capital have been very poor.

Key Morningstar Metrics for Crown Castle

• Fair Value Estimate: $125
• Star Rating: 4 Stars
• Economic Moat Rating: Narrow
• Uncertainty Rating: Medium

Economic Moat Rating

Crown Castle’s narrow moat is based on switching costs and efficient scale in the tower business. With the sale of the fiber business, we expect returns on invested capital will expand sharply, averaging 11% through 2034. The tower business provides an extremely high degree of operating leverage. Costs to operate a tower—predominantly land leases on which the tower sits—are mostly fixed. For a new rival to build a competing tower location, it would have to invest significant amounts of capital to construct a tower and likely offer a significantly lower price to persuade carriers to switch locations, ultimately shrinking the return potential. Also, carriers are responsible for all costs associated with installing equipment on towers and moving equipment if they wish to switch. Crown Castle’s tower churn has averaged only 1.4% of revenue annually since 2019.

Read more about Crown Castle’s moat rating.

Fair Value Estimate for Crown Castle Stock

Our $125 fair value estimate implies an enterprise value/EBITDA multiple of 25 and a price/adjusted funds from operations multiple of 30, based on our 2025 estimates. Excluding the impact of the fiber divestment, we expect annual revenue growth of 5% over our 10-year forecast period. We expect Crown’s tower segment to benefit from increasing data consumption and carriers’ push to 5G deployments, paving the way for further co-locations and amendments. For the stand-alone tower business, we expect margins to improve through our forecast, demonstrating its high degree of operating leverage. Although we forecast minimal new tower construction, we account for organic same-tower revenue growth of more than 5% annually throughout our forecast, which we expect to largely fall to the bottom line. We expect capital investment to decline drastically over our forecast after the sale of the fiber business.

Read more about Crown Castle’s fair value estimate.

Risk and Uncertainty

We think the deal to sell the fiber business significantly reduces uncertainty for Crown Castle. The company is working through churn related to T-Mobile’s acquisition of Sprint, but all Sprint contracts should be gone by the end of 2025. Beyond that, we see minimal risk of heightened churn in the US tower business, given the concentrated market for wireless services. The expiration of land leases is another risk, but Crown owns the land beneath 30% of its towers and holds leases longer than 20 years on another 40%. Changing technology could also enhance the coverage of alternative structures, such as small cells, thereby reducing demand for wireless tower space and potentially leaving assets without alternative uses. We expect such technological changes to develop gradually, but Crown’s relatively high debt burden might cause it to prioritize debt reduction if this threat materializes.

Read more about Crown Castle’s risk and uncertainty.

Crown Castle Bulls Say

• Wireless carriers’ continued rollout of 5G technology and new spectrum bands should drive organic growth for Crown through contract amendments and co-locations.
• Crown’s tower portfolio requires minimal capital investment, resulting in growing profitability and increased cash flow generation.
• With its fiber asset sale scheduled for 2026, Crown will realize an $8.5 billion cash windfall and cease throwing good money after bad, allowing it to invest in new towers or aggressively return cash to shareholders.

Crown Castle Bears Say

• With only a US tower business, Crown has much weaker growth prospects relative to peers American Tower and SBA.
• After a long cycle of fiber investment, Crown’s balance sheet is stretched, and management has no plans to reduce debt leverage. If the tower business hits a rough patch, cash flow will be needed to pay down debt rather than reward shareholders.
• If tower demand wanes, perhaps due to technological advancements, Crown’s assets have no significant alternative uses.

This article was compiled by Susan Dziubinski and Sylvia Hauser. Data as of Sept. 24, 2025, unless otherwise noted.