These two real estate investment trusts — both associated with the Gladstone name — offe...
"Digital" Gains in Real Estate
10/22/2019 5:00 am EST
Digital Realty (DLR) is a giant in the data center world, with a market cap of $26.6 billion and about 21% of the global market share for data centers. These centers capture the evolution of cloud computing, artificial intelligence, and the Internet of Things, notes Adam Mayers, editor of Adam Mayers Investing.
The San Francisco-based company has been public since 2004. Its portfolio includes 210+ properties in 14 countries on five continents. It provides temperature-controlled facilities, with secure internet connections and high levels of data security for businesses interested in cloud computing and storage.
The U.S. and U.K. are its top regions, but it also has two facilities in the Toronto area, one in Markham and the other in Vaughan. Its well-known clients include Microsoft (MSFT), Facebook (FB), IBM (IBM), Verizon (VZ), Oracle (ORCL), and LinkedIn (LNKD).
Digital continues to buy land in key global centers and build new facilities. In its second quarter, it bought 22.5 acres in Tokyo, Paris, and the Washington D.C. area.
In July, it announced the purchase of a land parcel near Seoul, South Korea which will open as a data centre in 2021. In early September, Cloud House opened, its latest facility in the London Docklands digital corridor.
Dividends: Digital Realty is a dividend champion with increases in each of the past 14 years averaging 11% a year. Its latest increase in February brings the annual payout rate to $4.32, yielding 3.35% at current prices.
Distributions received in a non-registered account or a tax-free savings account will be subject to a 15% withholding tax.
Digital Realty carries a moderate price to earnings ratio of 18.94, which reflects its prospects. As offsite data storage grows, it is well positioned to maintain its dominance. It has geographic diversification and, if the economy slows, few clients are likely to cut back by shutting their web and related online activities. Buy.
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