SBA Communications Expected To Showcase An Impressive Dividend CAGR Of 18% From 2022-2025, Analyst Says

BMO Capital Markets analyst Ari Klein initiated coverage of SBA Communications Corp SBAC at a Market Perform rating with a price target of $260.

The analyst is bullish on SBAC's position as a pure-play tower REIT and the highest U.S. tower exposure (76% of gross profit), yielding the highest margins/ROIC and lowest capital intensity.

However, Klein believes SBAC has the highest leverage among its peers, at 6.9x, but expects it to decrease and exit 2023 at 6.4x.

Also, the analyst is concerned about SBAC's a-la-carte leasing approach as it poses an increased risk in a period of probable lower carrier activity. 

Neverthesless, the analyst expects the company to see sector leading dividend CAGR of 18% from 2022-2025.

Although the analyst expects sluggish growth in the next few years, they expect AFFO/share to grow at a CAGR of 12.7% from 2018-2022, above its peers.

The analyst estimates an AFFO of $12.78 (0.5% above consensus) in 2023 and $13.63 (0.4% above the street consensus) in 2024.

Price Action: SBAC shares are trading lower by 0.83% at $241.26 on the last check Thursday.