In this article, we will be taking a look at the 10 best data center REIT dividend stocks to buy. To skip our detailed analysis of dividend investing, you can go directly to see the 5 Best Data Center REIT Dividend Stocks to Buy.
Within the real estate investment trust sector, data center REITs like Equinix, Inc. (REIT) (NASDAQ: EQIX), Digital Realty Trust, Inc. (NYSE: DLR), CyrusOne Inc. (NASDAQ: CONE), and CoreSite Realty Corporation (NYSE: COR), among others, are slowly but surely gaining popularity in investor circles. These REITs are responsible for owning and managing facilities that may be used to store data safely and reliably. As such, data center REITs offer products and services that aim to secure data and servers, such as by providing uninterruptable power supplies. With the outbreak of the coronavirus pandemic and the shift to working-from-home and online education, the demand for data, data storage, and security, practically skyrocketed, resulting in a 5.9% rise in the supply in major data centers in 2020. Keeping this in mind, thus, it is unsurprising that data center and data center REIT stocks are becoming notable investment options in 2021.
According to the National Association of Real Estate Investment Trusts, or Nareit, the total return for the top 5 data center REITs in 2020 was about 21%, and the total return for these stocks in July stood at 2.08%. These REITs were also reported to have paid out about $1,115 million in dividends in the first quarter of 2021 alone, while bringing in an accumulated FFO (funds from operations) of about $1,117 million. This optimistic performance in 2020 and 2021 is also another reason behind the rising popularity of data center REITs.
To put the above in perspective, we can note how according to a CNBC report this March, it was made clearer that we can expect a real boom in the data center REIT sector this year. According to Spencer Levy, who is a senior economic advisor for CBRE, a commercial real estate company, 2021 is expected to be a record year for data center REITs with about 500 megawatts of the new build being online as of March 2021. About 70% of this figure was already pre-leased at the time this comment was made. In 2020, data center REITs were also recorded to be the highest performing REIT sector because of the aforementioned 21% return.
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Without further ado, let’s take a look at the 10 best data center REIT dividend stocks to buy.
Our Methodology
We have selected data center REIT dividend stocks with yields going up to over 2%. Insider Monkey tracks the data of about 873 hedge funds, and we have also used this data to pick dividend stocks that are highly popular among hedge funds today. For each stock we have mentioned its yield and the number of hedge funds holding a stake in it, ranking them from the lowest to the highest dividend yield. Finally, we have used analysts’ ratings to determine which stocks are favorably placed in analyst and investor circles, picking stocks with mostly positive ratings and strong fundamentals.
Best Data Center REIT Dividend Stocks to Buy
10. Global X Data Center REITs & Digital Infrastructure ETF (NASDAQ: VPN)
Number of Hedge Fund Holders: N/A
Dividend Yield: 0.62%
Global X Data Center REITs & Digital Infrastructure ETF (NASDAQ: VPN), an exchange-traded fund, invests in data center REITs and digital infrastructure companies. The ETF ranks 10th on our list of the best data center REIT dividend stocks to buy and also invests in growth and value stocks.
In the past 6 months, Global X Data Center REITs & Digital Infrastructure ETF (NASDAQ: VPN) was up 25.29%, compared to the S&P 500’s 18.74% gain. In the past 9 months, Global X Data Center REITs & Digital Infrastructure ETF (NASDAQ: VPN) was up 22.8%, compared to 23.69% for the S&P 500.
Like Equinix, Inc. (REIT) (NASDAQ: EQIX), Digital Realty Trust, Inc. (NYSE: DLR), CyrusOne Inc. (NASDAQ: CONE), and CoreSite Realty Corporation (NYSE: COR), Global X Data Center REITs & Digital Infrastructure ETF (NASDAQ: VPN) is a notable choice for investors interested in data center dividend stocks.
9. Equinix, Inc. (REIT) (NASDAQ: EQIX)
Number of Hedge Fund Holders: 33
Dividend Yield: 1.3%
Equinix, Inc. (REIT) (NASDAQ: EQIX), a digital infrastructure company, operates as a data center REIT to serve digital leaders. The REIT enables leaders in the sector to access suitable infrastructure for the smooth provision of digital services. It ranks 9th on our list of the best data center REIT dividend stocks to buy now.
Truist holds a Buy rating on shares of Equinix, Inc. (REIT) (NASDAQ: EQIX) as of this July, and also raised its price target on the stock from $900 to $925.
In the second quarter of 2021, Equinix, Inc. (REIT) (NASDAQ: EQIX) had an FFO of $3.78, missing estimates by $1.03. The company’s revenue was $1.66 billion, up 12.77% year over year and beating estimates by $17.77 million. Equinix, Inc. (REIT) (NASDAQ: EQIX) has gained 46.27% in the past 6 months and 27.47% year to date.
By the end of the second quarter of 2021, 33 hedge funds out of the 873 tracked by Insider Monkey held stakes in Equinix, Inc. (REIT) (NASDAQ: EQIX) worth roughly $1.3 billion. This is compared to 41 hedge funds in the previous quarter with a total stake value of approximately $1.5 billion.
Baron Funds, an asset management firm, mentioned Equinix, Inc. (REIT) (NASDAQ: EQIX) in its second-quarter 2021 investor letter. Here’s what they said:
“The shares of Equinix, Inc. gained 18% in the most recent quarter. Equinix is the premier global data center company in the world. We believe the company is exceptionally well positioned to continue to benefit from powerful secular demand trends including strong growth in information technology outsourcing, increased cloud computing adoption, multi-year increases in mobile data traffic, global internet traffic, and the number of connected devices.”
8. Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (NYSE: SRVR)
Number of Hedge Fund Holders: N/A
Dividend Yield: 1.31%
Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (NYSE: SRVR) is another ETF on our list of the best data center REIT dividend stocks to buy, ranking 8th. The ETF invests in real estate, management and development, real estate operators and lessors, nonresidential building operators and lessors, and real estate operating companies.
In the past year, Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (NYSE: SRVR) had a price return of 19.40%, compared to a 31.27% price return for the S&P 500. The company’s total return was 21.27%, compared to the S&P 500’s 10.40% total return. Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (NYSE: SRVR) has gained 31.23% in the past 6 months and 23.08% year to date.
Like Equinix, Inc. (REIT) (NASDAQ: EQIX), Digital Realty Trust, Inc. (NYSE: DLR), CyrusOne Inc. (NASDAQ: CONE), and CoreSite Realty Corporation (NYSE: COR), Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (NYSE: SRVR) is a notable choice for investors interested in data center dividend stocks.
7. American Tower Corporation (REIT) (NYSE: AMT)
Number of Hedge Fund Holders: 55
Dividend Yield: 1.6%
American Tower Corporation (REIT) (NYSE: AMT) is among the largest global data center REITs, and an independent owner, operator, and developer of multitenant communications real estate. The company has about 181,000 communications sites, and ranks 7th on our list of the best data center REIT dividend stocks to buy.
As of this August, Argus holds a Buy rating on shares of American Tower Corporation (REIT) (NYSE: AMT), and has also raised its price target on the stock from $288 to $300.
In the second quarter of 2021, American Tower Corporation (REIT) (NYSE: AMT) had an FFO of $2.73, beating estimates by $0.43. The company’s revenue was $2.30 billion, up 20.17% year over year and beating estimates by $77.22 million. American Tower Corporation (REIT) (NYSE: AMT) has gained 50.11% in the past 6 months and 37.53% year to date.
By the end of the second quarter of 2021, 55 hedge funds out of the 873 tracked by Insider Monkey held stakes in American Tower Corporation (REIT) (NYSE: AMT) worth roughly $4.7 billion. This is compared to 58 hedge funds in the previous quarter with a total stake value of approximately $4.6 billion.
Like Equinix, Inc. (REIT) (NASDAQ: EQIX), Digital Realty Trust, Inc. (NYSE: DLR), CyrusOne Inc. (NASDAQ: CONE), and CoreSite Realty Corporation (NYSE: COR), American Tower Corporation (REIT) (NYSE: AMT) is a notable choice for investors interested in data center dividend stocks.
Richie Capital Group LLC, an equity-focused investment management firm, mentioned American Tower Corporation (REIT) (NYSE: AMT) in its fourth-quarter 2020 investor letter. Here’s what they said:
“American Tower (AMT – Down 9.15%) – The largest operator of wireless towers has faced challenges in the form of customer churn at one of their largest customers: Sprint/T-Mobile. However, the company remains well positioned as carriers domestically and internationally transition to 5G which will require a densification of their networks.”
6. iShares Cohen & Steers REIT ETF (BATS: ICF)
Number of Hedge Fund Holders: 4
Dividend Yield: 1.78%
iShares Cohen & Steers REIT ETF (BATS: ICF), yet another ETF, is next on our list of the best data center REIT dividend stocks to buy. The fund invests in mortgage real estate investment trusts (REITs), financials, diversified financials, and equity real estate investment trusts (REITs), among others. It ranks 6th on our list.
In the past year, the price return for iShares Cohen & Steers REIT ETF (BATS: ICF) was 35.05%, compared to the S&P 500’s 31.27% price return. The total return for the ETF was 38.15%, compared to a 10.40% total return for the S&P 500. iShares Cohen & Steers REIT ETF (BATS: ICF) has gained 9.6% in the past 6 months and 28.38% year to date.
By the end of the second quarter of 2021, 4 hedge funds out of the 873 tracked by Insider Monkey held stakes in iShares Cohen & Steers REIT ETF (BATS: ICF) worth roughly $2.4 million. This is compared to 5 hedge funds in the previous quarter with a total stake value of approximately $3.2 million.
Like Equinix, Inc. (REIT) (NASDAQ: EQIX), Digital Realty Trust, Inc. (NYSE: DLR), CyrusOne Inc. (NASDAQ: CONE), and CoreSite Realty Corporation (NYSE: COR), iShares Cohen & Steers REIT ETF (BATS: ICF) is a notable choice for investors interested in data center dividend stocks.
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Disclosure: None. 10 Best Data Center REIT Dividend Stocks to Buy is originally published on Insider Monkey.
