Based in Boston, Iron Mountain (IRM) is the world leader in document storage and retrieval; it currently assists more than 225,000 organizations in over 50 countries by storing customer records — both paper and electronic, suggests Mark Skousen, growth and income expert and editor of High-Income Alert.
Its clients include 90% of the Fortune 1000. Nothing is more important for companies — and non-profit organizations -- than protecting and maintaining their records.
No matter how “wired” your business is, retaining, managing, storing and protecting valuable documents can become a major headache. At some point, most business owners simply throw up their hands and say, “Find someone to handle this mess.”
That someone — with more than 1,400 facilities and 85 million square feet of storage space — is often Iron Mountain. Think of the company’s business as building condominiums for boxes. The company’s cost of real estate is on a square-footage basis, but it charges customers on a cubic basis.
History shows that once customers sign on, they generally stay. This results in a steady stream of recurring revenue. (Sales hit $4.23 billion over the last 12 months.) And existing customers tend to add 5% more boxes annually.
Iron Mountain is also investing heavily in data centers. These allow companies to lease space, exchange and store digital data, connect to cloud providers and access the internet. The firm got into the business by purchasing data centers from Credit Suisse and leasing them back to them. Now it is a separate line of business.
While Iron Mountain’s data centers currently account for just 5% of its annual sales, the company is already highly profitable — and growing. The company expects the business to account for 10% of its profits by next year. Earnings per share should hit $1.17 a share this year and rise to more than $1.50 a share next year.
A few years ago, Iron Mountain changed its structure to become a real estate investment trust. This allows it to avoid corporate taxes by paying out more than 90% of its net income to shareholders in the form of dividends. That means the yield — already attractive at 6.93% — will only grow with net income in the months ahead.
