DuPont Fabros Technology
Cloud computing is all the rage, but one overlooked factor in the success of the big cloud operators is finding the space to house the hardware and personnel. Well, these big data centers are the centerpiece of real estate investment trust DuPont Fabros (DFT), which acquires, develops and operates data centers across the country.
DFT’s data centers are high-security, specialized centers where the likes of Microsoft (MSFT), Yahoo (YHOO) and Rackspace (RAX) place parts of their operations. DFT operates 10 data centers, totaling 2.5 million gross square feet, and as of the end of the second quarter, it reported the portfolio was 91% leased. All told, the company produced more than $300 million in fiscal 2012 revenues.
Keep in mind that by law, a REIT must return at least 90% of its funds from operations (FFO) back to investors, and DuPont Fabros is making a habit of returning value. Funds from operations have climbed annually, from $56 million in 2008 to nearly $150 million in 2012, helping to fund a steady stream of dividend increases over the same period. Indeed, DFT’s quarterly payout has climbed from 8 cents per share in December 2009 to today’s 25 cents per share.
The future looks promising too, as DuPont Fabros continues to add to its available space in its huge Ashburn, Va., corporate campus. Meanwhile, DFT is expected to improve earnings by 63% this year and another 69% on top of that in fiscal 2014.
Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing, he was long YHOO and MSFT.