FV Hot Stocks: 6 Major Data Center REITs

Real Estate Investment Trusts or REITs 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 almost 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 article are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks ...

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