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Digital Realty (DLR) Cheers Investors With 5% Dividend Hike
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Digital Realty (DLR - Free Report) announced that its board of directors authorized a quarterly cash dividend payment of $1.22 per share, representing a sequential hike of 5.2% from the prior dividend of $1.16.
Based on the hiked rate of $1.22 for the quarter, the annual dividend comes to $4.88 per share. This increased dividend will be paid out on Mar 31 to shareholders of record on Mar 15, 2022. At this new rate, the annualized yield comes at 3.6%, based on the stock’s closing price of $137.24 on Mar 3.
Digital Realty is committed to increasing shareholder value through dividend hikes. The company has consistently raised dividends every year since its initial public offering and the latest dividend hike marks the 17th consecutive year of increase. DLR’s dividend witnessed a CAGR of 10% over the 2005-2021 period. Such disbursements highlight the company’s operational strength and commitment toward rewarding shareholders handsomely.
Is the Dividend Hike Sustainable?
Digital Realty’s ability to sustain the hiked dividend depends on the strength of its business and its ability to generate recurring cash flows. Its performance highlights a healthy funds from operations (FFO) picture. Over the next five years, its FFO is projected to grow at a rate of 6.8%.
Digital Realty has a robust operating platform and ample liquidity to support the dividend payment. DLR is well-poised to benefit from the rising demand for data centers. The heightening reliance on technology and the acceleration in digital transformation strategies by enterprises are expected to keep demand high for this asset category. By capitalizing on such factors and its balance-sheet strength, Digital Realty is experiencing solid leasing activity and is focused on expanding its portfolio on accretive acquisitions and development efforts.
This REIT’s continued revenue growth and adjusted EBITDA margins, as well as favorable return on the invested capital, indicate the strength in its core underlying business and support the company’s ability to manage near-term obligations.
Digital Realty exited 2021 with cash and cash equivalents of $142.7 million, up from $116 million recorded at the end of the third quarter of 2021. As of Dec 31, 2021, its net debt-to-adjusted EBITDA was 6.1X, while its fixed charge coverage was 5.4X.
These indicate that the company’s dividends are well-covered and DLR will be able to sustain its current hiked dividend.
Conclusion
As investors are always on the lookout for companies with a track record of consistent and incremental dividend payouts to bet their money on, solid dividend payouts are the biggest enticement for REIT investors. Such moves boost investors’ confidence in the stock.
Some key picks from the REIT sector include Prologis, Inc. (PLD - Free Report) , Iron Mountain Incorporated (IRM - Free Report) and Public Storage (PSA - Free Report) .
Prologis holds a Zacks Rank of 2 (Buy) at present. Prologis’ 2022 revenues are expected to increase 8.7% year over year.
The Zacks Consensus Estimate for PLD’s 2022 FFO per share has been revised 1.2% upward in the past month to $5.02.
The Zacks Consensus Estimate for Iron Mountain’s 2022 FFO per share has moved 4.7% north to $3.09 in the past week.
Iron Mountain's 2022 revenues are expected to increase 15.5% year over year. Currently, IRM carries a Zacks Rank of 1.
The Zacks Consensus Estimate for Public Storage’s 2022 FFO per share has moved 0.7% north to $14.86 over the past week.
Currently, Public Storage carries a Zacks Rank of 2. PSA's long-term growth rate is projected at 8.30%.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Digital Realty (DLR) Cheers Investors With 5% Dividend Hike
Digital Realty (DLR - Free Report) announced that its board of directors authorized a quarterly cash dividend payment of $1.22 per share, representing a sequential hike of 5.2% from the prior dividend of $1.16.
Based on the hiked rate of $1.22 for the quarter, the annual dividend comes to $4.88 per share. This increased dividend will be paid out on Mar 31 to shareholders of record on Mar 15, 2022. At this new rate, the annualized yield comes at 3.6%, based on the stock’s closing price of $137.24 on Mar 3.
Digital Realty is committed to increasing shareholder value through dividend hikes. The company has consistently raised dividends every year since its initial public offering and the latest dividend hike marks the 17th consecutive year of increase. DLR’s dividend witnessed a CAGR of 10% over the 2005-2021 period. Such disbursements highlight the company’s operational strength and commitment toward rewarding shareholders handsomely.
Is the Dividend Hike Sustainable?
Digital Realty’s ability to sustain the hiked dividend depends on the strength of its business and its ability to generate recurring cash flows. Its performance highlights a healthy funds from operations (FFO) picture. Over the next five years, its FFO is projected to grow at a rate of 6.8%.
Digital Realty has a robust operating platform and ample liquidity to support the dividend payment. DLR is well-poised to benefit from the rising demand for data centers. The heightening reliance on technology and the acceleration in digital transformation strategies by enterprises are expected to keep demand high for this asset category. By capitalizing on such factors and its balance-sheet strength, Digital Realty is experiencing solid leasing activity and is focused on expanding its portfolio on accretive acquisitions and development efforts.
This REIT’s continued revenue growth and adjusted EBITDA margins, as well as favorable return on the invested capital, indicate the strength in its core underlying business and support the company’s ability to manage near-term obligations.
Digital Realty exited 2021 with cash and cash equivalents of $142.7 million, up from $116 million recorded at the end of the third quarter of 2021. As of Dec 31, 2021, its net debt-to-adjusted EBITDA was 6.1X, while its fixed charge coverage was 5.4X.
These indicate that the company’s dividends are well-covered and DLR will be able to sustain its current hiked dividend.
Conclusion
As investors are always on the lookout for companies with a track record of consistent and incremental dividend payouts to bet their money on, solid dividend payouts are the biggest enticement for REIT investors. Such moves boost investors’ confidence in the stock.
Shares of this Zacks Rank #3 (Hold) company have rallied 4% compared with its industry’s growth of 17.6% over the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Stocks to Consider
Some key picks from the REIT sector include Prologis, Inc. (PLD - Free Report) , Iron Mountain Incorporated (IRM - Free Report) and Public Storage (PSA - Free Report) .
Prologis holds a Zacks Rank of 2 (Buy) at present. Prologis’ 2022 revenues are expected to increase 8.7% year over year.
The Zacks Consensus Estimate for PLD’s 2022 FFO per share has been revised 1.2% upward in the past month to $5.02.
The Zacks Consensus Estimate for Iron Mountain’s 2022 FFO per share has moved 4.7% north to $3.09 in the past week.
Iron Mountain's 2022 revenues are expected to increase 15.5% year over year. Currently, IRM carries a Zacks Rank of 1.
The Zacks Consensus Estimate for Public Storage’s 2022 FFO per share has moved 0.7% north to $14.86 over the past week.
Currently, Public Storage carries a Zacks Rank of 2. PSA's long-term growth rate is projected at 8.30%.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.