Digital Realty Trust (DLR)

The logo for REIT Digital Realty on the side of a Silicon Valley data center building
Sundry Photography/Shutterstock

Digital Realty Trust is a real estate investment trust that owns, operates, acquires and develops data centers. The company’s shares climbed more than 20% over the past year, but Bank of America believes the REIT can go even higher.

Earlier this month, the bank reiterated its Buy rating on DLR and increased its price target from US$175 to US$190. Considering that the REIT trades at around US$160 per share, Bank of America is projecting a potential upside of 18.8%.

Data centers have been in high demand, so unsurprisingly, business is booming at Digital Realty Trust. Since 2005, the company’s core funds from operations (FFO) per share have increased at a compound annual growth rate (CAGR) of 11%.

Digital Realty Trust also offers a steadily increasing stream of dividends to shareholders: It has raised its payout for 16 consecutive years.

In Q3 of 2021, the company signed total bookings that are expected to boost its annualized rental revenue by US$113 million. Core FFO came in at US$1.65 per share for the quarter, up 7.1% from a year ago.

DLR currently offers an annual dividend yield of 2.9%.

Join Masterworks to invest in works by Banksy, Picasso, Kaws, and more. Use our special link to skip the waitlist and join an exclusive community of art investors.

Skip waitlist

SBA Communications (SBAC)

Companies that own communications towers represent another way to play the 5G boom.

“We expect carrier capex intended to build out 5G networks, C-Band, and other spectrum deployments will remain the key tailwind for demand growth,” says Bank of America about this group.

Among tower owners, SBA Communications is Bank of America’s top pick.

Structured as a REIT, SBAC owns and operates a portfolio of wireless communications infrastructure that includes towers, buildings, rooftops, distributed antenna systems and small cells.

The company leases antenna space to a variety of wireless service providers under long-term lease contracts. It also assists wireless services providers and operators in developing their own networks.

SBAC has attracted a lot of investor attention, with shares soaring 223% over the past five years.

As you’d expect from that share price performance, the company is pumping out impressive growth rates.

In Q3 of 2021, SBAC’s total revenue increased 12.7% year-over-year to US$589.3 million. It generated adjusted FFO of US$2.71 per share for the quarter, up 13.9% from the year-ago period.

The company pays quarterly dividends with an annual yield of just under 0.7%.

Bank of America has a Buy rating on SBAC and recently raised its price target on the company from US$365 to US$425. That implies a potential upside of around 25%.

But with share prices that high, you may not be able to afford a whole share. That's no reason for you not to invest; try fractional investing, which allows you to buy fractions of shares with as much or as little as you have.

Crown Castle International (CCI)

Crown Castle International is another communications tower REIT that Bank of America is bullish on.

Headquartered in Houston, Crown Castle has a huge infrastructure portfolio that consists of more than 40,000 cell towers, over 80,000 small cell nodes and about 80,000 route miles of fiber.

The company has a strong appeal to dividend investors. It pays quarterly dividends of US$1.47 per share, translating to an annual yield of 3.1%. The dividend has increased every year and management is targeting a 7% to 8% dividend per share annual growth rate going forward.

In the latest earnings report, Crown Castle CEO Jay Brown made it very clear that 5G will be a catalyst for the company’s business in 2022.

“We are focused on supporting our customers as they upgrade their existing cell sites as part of the first phase of the 5G build out in the U.S., which is resulting in record tower application volumes this year and an expected 20% increase in core leasing activity for our Towers segment for full year 2022 when compared to projected 2021 levels,” he said.

Bank of America has a Buy rating on Crown Castle and recently raised its price target on the company to US$224, suggesting a potential upside of 19%.

Don't let your portfolio get dragged down by commission fees. Wealthsimple Trade lets you trade for $0 commission, and for a limited time, you can get two free stocks for signing up and funding your account. Will you get Apple stock? How about Air Canada?

Get your free stocks

Last thoughts on 5G stocks, and an alternative

At the end of the day, keep in mind that there are many ways to capitalize on the 5G rollout. From wireless carriers and communications infrastructure companies mentioned above, to device makers and semiconductor companies, many businesses are well positioned to benefit in the 5G era.

And since each sector provides a unique risk-return profile, it’s important to do your research before putting your money in the market.

That said, stock markets often move in unison, and if you're looking for a play that doesn't correlate with markets, consider something a little more unique: fine art.

While investing in blue-chip art has long been the domain of the very wealthy, thanks to a new platform, you can invest in the works of various big-name artists, even if you can't afford a whole painting.

Fine art as an investment

Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.

That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.

On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.

Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.

About the Author

Jing Pan

Jing Pan

Investment Reporter

Jing is an investment reporter for MoneyWise. Prior to joining the team, Jing was a research analyst and editor at one of the leading financial publishing companies in North America. Jing has covered numerous aspects of the financial markets, from blue chip dividend stocks to small cap tech stocks to precious metals and currency. An avid advocate of investing for passive income, he wrote a monthly dividend stock newsletter for the better half of the past decade. In his spare time, Jing plays basketball, the violin and the ukulele.

What to Read Next

Disclaimer

The content provided on MoneyWise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.