High Yield REIT: Data and Dollars

07/07/2015 7:00 am EST


Mark Skousen

Editor, Forecasts & Strategies, High-Income Alert

My latest featured recommendation is a San Francisco-based data center real estate investment trust, notes Mark Skousen, editor of High Income Alert.

Digital Realty (DLR) has 75 data-center offices in Boston, Chicago, Dallas, Los Angeles, New York, Northern Virginia, and Phoenix, as well as in Dublin, London, and Paris.

These data centers store emails and other digital information closely linked with the growth in high tech.

Digital Realty’s data centers are designed, built, and operated by professionals with decades of experience. Its properties are centered where customers need them.

These data centers store emails and other digital information closely linked with the growth in high tech.

The whole sector is booming and there are plenty of rumors of mergers and acquisitions.

The price of the trust has been strong. This is no great surprise. Businesses, non-profit organizations, and government agencies are all drowning in a sea of data.

There’s legal data, accounting data, tax data, product data, and regulatory data. It may be in print or spreadsheet form (not to mention digital photographs, video, and social media, too).

Some data is stacked in warehouses. Other quantities are stored on electronic devices. The rest reside in the cloud in cyberspace.

And the company has the financial strength to be a stable and reliable long-term partner.

Profit margins are strong (over 16%) and earnings have exploded in the past year, up 162% to $200 million on revenues of $1.65 billion.

Still, Digital Realty is relatively cheap, selling for 12 times expected earnings, with a rising dividend policy.

The company recently raised its dividend to 85 cents per share (currently 5.1% yield). The stock also tends to do quite well during the summer months.

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