Bank of America says 5G ‘comes alive’ in 2022 — it sees big upside potential for 3 smaller-name stocks that could give you a piece in a pivotal year

Bank of America says 5G ‘comes alive’ in 2022 — it sees big upside potential for 3 smaller-name stocks that could give you a piece in a pivotal year

2021 turned out to be a great year for many 5G stocks. But according to Bank of America, 2022 could be even better.

“This is the year 5G comes alive,” says the bank’s Global Research team.

Bank of America points out that wireless carriers like Verizon, AT&T and T-Mobile plan to spend tens of billions of dollars on 5G deployment in the next few years. And that spending could boost the business at communications infrastructure companies.

“This is the literal beginning. ‘22 will be a very exciting period for Comm. Infrastructure,” the team says.

So here’s a look at three of Bank of America’s top picks in this sector. They may not be as well known as Verizon or AT&T, but the financial juggernaut sees big upside potential in these stocks as the 5G rollout continues.

Digital Realty Trust (DLR)

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 $175 to $190. Considering that the REIT trades at around $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 $113 million. Core FFO came in at $1.65 per share for the quarter, up 7.1% from a year ago.

DLR currently offers an annual dividend yield of 2.9%.

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