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Tags: data center reit | digital realty | equinix | iron mountain | retirement savings | dividend
OPINION

Bob Ciura: Dividends From 3 Top Data Center REITs

Bob Ciura: Dividends From 3 Top Data Center REITs
(AP)

Bob Ciura By Monday, 03 July 2023 09:05 AM EDT Current | Bio | Archive

Investors looking to generate higher income levels from their investment portfolios should look at Real Estate Investment Trusts. REITs are widely appealing for income investors due to their high dividend yields.

Data center REITs typically own properties are a combination of data centers that store and process information, technology manufacturing sites and Internet gateway datacenters which are in high demand right now.

This article will discuss 3 data center REITs that offer an attractive mix of high dividend yields and future dividend growth potential.

Digital Realty (DLR)

Digital Realty owns over 300 facilities in 28 countries on 6 continents. The trust has a market capitalization of ~$30 billion. On April 27th, 2023, Digital Realty reported first quarter 2023 results for the period ending March 31st, 2023. For the quarter, Digital Realty’s revenue came in at $1.3 billion, a 19% increase compared to Q1 2022. During the quarter, the company generated $1.66 in core FFO per share compared to $1.67 per share prior.

Digital Realty also updated its 2023 guidance, and now anticipates $5.5 billion to $5.6 billion (down from $5.7 billion to $5.8 billion) in revenue and $6.65 to $6.75 (unchanged) in core FFO.

Digital Realty has been very strategic in its acquisitions. For example, in 2017, Digital Realty completed its purchase of DuPont Fabros Technology, a REIT that leased properties to some of the largest tech companies in the world. Companies like Microsoft (MSFT) and Facebook (FB) are then free to build their own data centers within the properties. More recently, Digital Realty added Interxion, gaining exposure to the European cloud industry.

In 2022 Digital Realty declared a $1.22 quarterly dividend, marking a 5% increase and the company’s 17th straight year of increasing its payout. The stock currently yields 4.6%.

Equinix (EQIX)

Equinix also specializes in data centers. The trust operates 248 data centers across 32 countries on 6 continents serving over 10,000 customers. Slightly less than half of the data centers are outright owned by Equinix, and these generate 63% of recurring revenues.

EQIX reports revenue in a couple of different segments: colocation, interconnection, managed infrastructure and other. The Interconnection Solutions segment allow customers to connect directly, securely, and dynamically within and between other EQIX data centers around the globe. There are currently 452,000+ total interconnections.

Equinix reported first quarter 2023 results on May 3rd, 2023. For the quarter, the company announced a 15% increase in revenue compared to Q2 2022, to $2.0 billion. The company has achieved 81 consecutive quarters of revenue growth. Adjusted funds from operations (AFFO) for the quarter was $802 million. AFFO per share increased 21% compared to the previous quarter to $8.59.

Management provided 2023 annual guidance and expects a roughly 13.5% increase in revenues to $8.23 billion. Guidance also calls for AFFO of roughly $2.97 billion, a 9.5% increase over 2022. They also estimate AFFO per share gains of 6.5% to $31.58.

EQIX has an attractive dividend growth profile. On February 15th, 2023, Equinix announced a 10% increase to the dividend to $3.41 quarterly per share. It has increased its dividend for 7 consecutive years. Shares currently yield 1.8%.

Iron Mountain (IRM)

Iron Mountain is a storage and information management REIT. Its services include record management, destruction, fulfillment services, data protection and recovery, server and computer backup services, and safeguarding of electronic and physical media. Iron Mountain operates in North America, Latin America, Europe, and the Asia Pacific region.

Iron Mountain reported its first quarter earnings results on May 4. The trust announced that it generated revenues of $1.31 billion during the quarter, which was up 5% from the revenues that Iron Mountain generated during the previous year’s quarter.

Iron Mountain’s normalized funds-from-operations came in at $0.71 per share during the first quarter, which was up 8% compared to the previous year’s quarter. The company managed to grow its margins during the period, compared to the previous year’s quarter, as its expenses rose a little less than its revenues.

Management reiterated its guidance for this year’s adjusted FFO-per-share with a range of $3.91 to $4.00, which represents solid growth of around 4% at the midpoint of the guidance range.

With a dividend payout ratio of approximately 63% for 2023 (based on FFO-per-share) the dividend appears secure. Shares currently yield 4.6%.

_______________
Bob Ciura has worked at Sure Dividend since October 2016. He oversees all content for Sure Dividend and its partner sites. Bob received a Bachelor’s degree in Finance from DePaul University, and an MBA with a concentration in Investments from the University of Notre Dame.

© 2024 Newsmax Finance. All rights reserved.


BobCiura
Investors looking to generate higher income levels from their investment portfolios should look at Real Estate Investment Trusts. REITs are widely appealing for income investors due to their high dividend yields.
data center reit, digital realty, equinix, iron mountain, retirement savings, dividend
754
2023-05-03
Monday, 03 July 2023 09:05 AM
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