Introduction
The 6 major data center hot stocks, Real Estate Investment Trusts, or REITs, in this article are a very popular asset class especially for people looking for above-average dividend income with a capital appreciation kicker. Traditional REITs are known for investing in real estate such as apartments, hotels, healthcare facilities, office buildings, shopping malls, and even mortgages, etc. However, to many investors those types of REITs are considered old-school. In the 21st-century one of the hottest segments of REIT-dom are Data Center REITs. These are real estate investment trusts that own server farms for the Internet and other data hungry needs. Today, everybody, and most every business is online creating massive needs for data storage.
There are 5 major data center REITs, and they are CoreSite Realty Corp. (COR), Digital Realty Trust (DLR), Equinix (EQIX), CyrusOne (CONE), and QTS Realty Trust (QTS). Although these are the 5 major datacenter REITs, there is also a 6th choice Iron Mountain Inc. (IRM), which is more diversified but focusing more and more on data storage. For year-end 2020 storage revenues were just under $700 million increasing slightly less than 3%. This compares to their service revenues which amounted to about $360 million which fell approximately 11%. Clearly, the data storage business is a major focal point of the company and the largest potential source of future growth for Iron Mountain. This leads some investors to choose datacenter REITs as a substitute opportunity for mostly inflated tech stocks.
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Disclosure: Long IRM
Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.