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Last week, we ran a poll to see which stock you wanted us to review based on previous requests from Wealthy Retirement readers.

The winner was Iron Mountain (NYSE: IRM), a real estate investment trust, or REIT, that’s focused on data management and storage.

The company pays a $0.785 per share quarterly dividend, which comes out to a 3.2% yield.

Is the dividend safe, or should investors consider getting off the mountain?

Since the company is a REIT, we’re going to use adjusted funds from operations (AFFO) as our measure of cash flow.

Over the past several years, Iron Mountain’s AFFO has been steadily growing. In 2024, AFFO totaled $1.3 billion, up from $1.2 billion the prior year. This year, AFFO is forecast to grow to $1.5 billion.

For most companies, I want to see a payout ratio of 75% of their cash flow or less.

However, with REITs, I am comfortable with a company paying out all of its cash flow in dividends. By law, REITs must pay 90% or more of their earnings in dividends, and they often exist for the purpose of paying dividends to shareholders. Therefore, they usually have higher payout ratios than a typical company.

Iron Mountain paid shareholders 59% of its AFFO in dividends in 2024. According to forecasts, the payout ratio should dip to 54% this year. So its payout ratio is healthy. As long as a REIT’s payout ratio is below 100%, I’m fine with it.

The company also has a solid dividend-raising track record.

It began paying a dividend in 2010 and has raised it every year since, except during the pandemic between 2020 and 2022. It began boosting the dividend again in 2023.

Iron Mountain doesn’t have the highest yield in the REIT space, but its dividend is reliable and growing. With increasing cash flow and a solid history of annual dividend raises (as long as there isn’t a pandemic happening), the company’s dividend has a very low risk of being cut in the near future.

Dividend Safety Rating: A

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