Digital Realty Trust, Inc. (NYSE:DLR) is a real estate investment trust that focuses on owning and operating properties that specialize in housing tech support systems. That means DLR’s client list is the fastest growing part of the tech market.
Big data, cloud computing, data centers and internet gateway firms look to DLR for solutions to their growth challenges.
You see, as companies expand their services and business, they have to shop for space, and if they buy it, they become a de facto property management company. For most of these companies, margins are pretty high, so managing all this may not be a big deal.
But it’s a highly competitive market, so if you’re not as attractive as your rivals, you may just crash and burn. That’s why DLR and companies like it are becoming the go-to solution for Silicon Valley and beyond.
It currently owns more than 150 properties, 198 buildings, in 14 countries on five continents. It has global reach that is expanding as quickly as the Digital Age grows. Recently, it purchased two buildings in Santa Clara, California to expand operations in Northern California, one of its top markets.
DLR Stock Has a Lot to Offer
Remember, these facilities have to be “five nines” capable, which means they have to be online 99.999% of the time. This is what makes DLR properties unique — they are five nines capable and that’s a compelling attraction for companies looking to expand without having to be a property owner or manager.
As a REIT, DLR is what they call a ‘pass-through’. That means the company is set up as a trust where investors are basically treated as business partners and 90% of the profits have to be distributed to the partners. It does this via its dividend.
Right now, DLR stock is throwing off a respectable 3.5% dividend. The stock is also up more than 35% year to date. That’s a pretty impressive total return.
And that is the magic of DLR. It’s not just a solid REIT, where you kick back and reinvest the dividends. It’s a total-return play with a serious growth kicker that is just finding its footing.
Its recent Q2 numbers tell the story: earnings growth came in at 17.6%, and earnings-per-share growth was up almost 10%. Profits were up 18% in this sluggish economy. Its earnings blew away estimates and its funds from operations (FFO, the key measure of profitability for REITs) continue to grow strongly.
DLR stock is a great way to play tech without taking a flier on a volatile tech stock that suffers from the vagaries of the market. Here, you get a market leader that is expanding its brand around the globe and taking advantage of the successful tech companies that are looking for its services.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.