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The yield on 30-year U.S. Treasury bonds, which helps set the cost of borrowing for large companies, has climbed back to levels not seen since before the 2008 financial crisis. This move was driven by a stronger-than-expected manufacturing report and rising oil prices, both of which suggest inflation could stay higher for longer.
This is a specific problem for Crown Castle because it is a real estate investment trust, a type of company that typically carries a lot of debt to own its cell towers. When interest rates rise, it costs more for the company to refinance that debt, which leaves less cash available to pay out as dividends to shareholders. Higher yields also make the stock less attractive compared to safe government bonds.
Source: Bloomberg Markets and Finance
The interest rate on 30-year government bonds just reached its highest point since 2001. This rate is a benchmark for long-term borrowing costs across the entire economy, and it often moves higher when people are worried that inflation will stay elevated.
Rising rates are a specific challenge for real estate investment trusts like Crown Castle. These companies often carry large amounts of debt to pay for their towers, and higher rates make it more expensive to refinance that debt. Additionally, because these stocks are often held for their dividends, they can become less attractive to buyers when they have to compete with the higher yields available from safe government bonds.
The average rate on a 30-year fixed mortgage rose to 6.69 percent this week. While this specifically affects home buyers, it is a sign that broader interest rates remain high. As a real estate investment trust, the company carries a lot of debt to fund its cell towers. When rates stay high, it costs more for the business to refinance that debt, which can leave less cash available to pay out as dividends to shareholders.
The board declared a quarterly cash dividend of $1.0625 per share, which will be paid on September 30. This is a routine move for the company. Maintaining the dividend is a key part of the plan as the business sells off its fiber assets to focus entirely on its core cell tower leasing business.
Source: GlobeNewsWire
The company earned $0.69 per share last quarter, which was well ahead of the $0.39 analysts expected. Revenue came in at about $1.01 billion. Management also nudged its full-year profit forecast higher, now expecting about $870 million in net income for 2026.
This quarter shows the business is stable as it goes through a major change. It is selling its fiber and small cell unit for $8.4 billion to focus entirely on its traditional cell towers. While the higher profit is a good sign, the core tower business still faces slow growth. The success of this pivot depends on using the sale money to pay down debt and wireless carriers continuing to rent more space on existing towers.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
The company has a reliable habit of beating profit estimates, though revenue has been shrinking slightly as it narrows its focus to towers.
| Expectation | |
|---|---|
| EPS | $0.69 |
| Revenue | $1.01B |
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