Digital Realty Trust Inc's Dividend Analysis
Assessing the Upcoming Dividend and Financial Health of Digital Realty Trust Inc
Digital Realty Trust Inc (NYSE:DLR) recently announced a dividend of $1.22 per share, payable on 2024-01-19, with the ex-dividend date set for 2023-12-14. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Digital Realty Trust Inc's dividend performance and assess its sustainability.
What Does Digital Realty Trust Inc Do?
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Digital Realty owns and operates over 300 data centers worldwide. It has nearly 40 million rentable square feet across five continents. Digital's offerings range from retail co-location, where an enterprise may rent a single cabinet and rely on Digital to provide all the accommodations, to "cold shells," where hyperscale cloud service providers can simply rent much, or all, of a barren, power-connected building. In recent years, Digital Realty has de-emphasized cold shells and now primarily provides higher-level service to tenants, which outsource their related IT needs to Digital. Digital Realty has also moved more into the co-location business, increasingly serving enterprises and facilitating network and cloud connections. Digital Realty operates as a real estate investment trust.
A Glimpse at Digital Realty Trust Inc's Dividend History
Digital Realty Trust Inc has maintained a consistent dividend payment record since 2004. Dividends are currently distributed on a quarterly basis. Digital Realty Trust Inc has increased its dividend each year since 2004. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 19 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Digital Realty Trust Inc's Dividend Yield and Growth
As of today, Digital Realty Trust Inc currently has a 12-month trailing dividend yield of 3.59% and a 12-month forward dividend yield of 3.59%. This suggests an expectation of the same dividend payments over the next 12 months. Over the past three years, Digital Realty Trust Inc's annual dividend growth rate was 4.10%. Extended to a five-year horizon, this rate increased to 5.30% per year. And over the past decade, Digital Realty Trust Inc's annual dividends per share growth rate stands at 5.30%. Based on Digital Realty Trust Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Digital Realty Trust Inc stock as of today is approximately 4.65%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Digital Realty Trust Inc's dividend payout ratio is 1.69, which may suggest that the company's dividend may not be sustainable. Digital Realty Trust Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Digital Realty Trust Inc's profitability 7 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Digital Realty Trust Inc's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and Digital Realty Trust Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Digital Realty Trust Inc's revenue has increased by approximately 0.90% per year on average, a rate that outperforms approximately 50.24% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Digital Realty Trust Inc's earnings increased by approximately -5.60% per year on average, a rate that outperforms approximately 35.47% of global competitors. Lastly, the company's 5-year EBITDA growth rate of -3.20%, which outperforms approximately 36.9% of global competitors.
Next Steps
The analysis of Digital Realty Trust Inc's dividend payments, growth rate, payout ratio, profitability, and growth metrics paints a comprehensive picture of its financial health and future prospects. While the dividend history is strong, the payout ratio raises some concerns about sustainability which are somewhat mitigated by the company's profitability and growth rankings. Investors considering Digital Realty Trust Inc for its dividend potential should weigh these factors carefully. For those seeking to expand their portfolio with high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener for informed decision-making.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
