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Data center dominance: The tech REIT behind the cloud boom

Data center dominance: The tech REIT behind the cloud boom
Bogdan Stojkov

The infrastructure supporting data holds significant importance in our digital landscape. Among the key players in this domain are data center real estate investment trusts (REITs), entities specializing in owning and managing income-generating data center properties. Often unseen yet pivotal, these facilities serve as the backbone of our digital infrastructure, facilitating the storage, processing, and management of vast amounts of digital information and services. In this article, we’ll introduce you to our top data center REIT pick for this year.

What are data center REITs?

Data centers are specialized facilities equipped to house and provide the necessary infrastructure for computer systems, servers, networking equipment, and storage components. As the demand for data storage and processing capabilities continues to surge, driven by the increasing reliance on cloud computing, big data, and digital services, investing in data center REITs has emerged as a lucrative avenue for individuals seeking exposure to this burgeoning sector.

Benefits of investing in data center REITs

Investing in a data center REIT offers several advantages:

  • Exposure to growing demand: With the escalating need for data storage and processing capabilities, data center REITs stand to benefit from the ever-expanding digital ecosystem;
  • Stable income streams: Data center REITs typically lease space to technology companies, cloud service providers, and other enterprises, ensuring steady rental income streams;
  • Potential for dividend growth: Many data center REITs, including Digital Realty Trust, have a history of increasing dividends over time, making them attractive options for income-seeking investors.

Digital Realty Trust (NYSE: DLR)

One of the prominent players in the data center REIT space is Digital Realty Trust (NYSE: DLR). With a global footprint spanning more than 25 countries across six continents, Digital Realty boasts ownership, operation, or ownership interests in over 300 data centers, solidifying its position as a market leader.

Digital Realty Trust stock price today

As of March 12, 2024, Digital Realty Trust’s stock price is $145.50, reflecting a marginal decline of $3.98, equivalent to approximately 2.66%.

DLR stock dividend

  • DLR dividend yield: Digital Realty currently pays a quarterly dividend of $1.22 per share, translating to an annual payout of $4.88 per share. At current levels, this equates to a yield of approximately 4.10%, offering investors a compelling income-generating opportunity;
  • DLR dividend history: Since its initial public offering (IPO) in 2004, Digital Realty has raised its dividend 18 times, underscoring its commitment to delivering value to shareholders. This consistent dividend growth trajectory further cements Digital Realty’s status as both a high-yield and dividend-growth stock.

Global reach and diversification

Digital Realty’s extensive global presence not only ensures geographic diversification but also positions the company to capitalize on diverse market dynamics and emerging trends in the data center industry. By strategically establishing data centers in key locations worldwide, Digital Realty remains well-positioned to meet the evolving needs of its clients while tapping into new growth opportunities.

Sustainable growth strategy

Digital Realty’s growth strategy revolves around expanding its portfolio of data center properties, enhancing its technological capabilities, and forging strategic partnerships to fuel innovation and drive value creation. By staying at the forefront of technological advancements and market trends, Digital Realty aims to sustain its growth momentum and deliver long-term value to its stakeholders.

Final words: Is Digital Realty Trust a good investment?

As the digital revolution continues to reshape industries and redefine the way we interact with technology, the importance of robust data center infrastructure cannot be overstated. Data center REITs, with their focus on owning and managing these critical facilities, offer investors a unique opportunity to capitalize on the growing demand for data storage and processing capabilities. Among these REITs, Digital Realty Trust stands out as a formidable player, leveraging its global reach, dividend growth track record, and commitment to innovation to drive sustainable value creation in the world of data centers.

In an era where data is the new currency, Digital Realty Trust remains at the forefront, powering the digital economy and shaping the future of technology.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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