Digital Realty
Dec 17, 2019
Bought Digital Realty, a data centre reit, on a dip.
DLR supports the data center, colocation and interconnection strategies of more than 2000 firms across its secure, network-rich portfolio of data centres located throughout North America, Europe, Latin America, Asia and Australia. Some of DLR's clients include Facebook, IBM, Oracle, and Verizon.
1. Has excellent assets throughout the world (3 in Singapore: 2 in Loyang Way, 1 in Jurong East International Business Park).
2. Enjoys economies of scale being the 2nd largest data centre reit in the world,
3. Has shown growth in dividend yield over 14 years with payout being supported by consecutive years of FFO growth,
4. Managed leverage with prudence (debt to EBITDA:5).
DLR's business is 95% wholesale enterprise, meaning to say that DLR merely provides the space for companies to set up their data servers. How much does it cost for a big company to set up its equipment in a data centre? About $15-30 million to do just that! So switching to another data centre might not be such a good idea. It will be a costly move that involves time (to move) and business down time as well. Hence, it is safe to say that DLR's business is sticky and it can retain its clients fairly confidently.
Growth in 5G, and in demand for cloud storage, AI, IoT, virtual reality, autonomous vehicle etc should impact DLR positively.
Fair value according to SimplyWallSt is $235.64. Bought at $114.70.
Dividend yield: 3.63%.
Plan: buy and hold for dividends and capital appreciation, and accumulate more.
Bought Digital Realty, a data centre reit, on a dip.
DLR supports the data center, colocation and interconnection strategies of more than 2000 firms across its secure, network-rich portfolio of data centres located throughout North America, Europe, Latin America, Asia and Australia. Some of DLR's clients include Facebook, IBM, Oracle, and Verizon.
1. Has excellent assets throughout the world (3 in Singapore: 2 in Loyang Way, 1 in Jurong East International Business Park).
2. Enjoys economies of scale being the 2nd largest data centre reit in the world,
3. Has shown growth in dividend yield over 14 years with payout being supported by consecutive years of FFO growth,
4. Managed leverage with prudence (debt to EBITDA:5).
DLR's business is 95% wholesale enterprise, meaning to say that DLR merely provides the space for companies to set up their data servers. How much does it cost for a big company to set up its equipment in a data centre? About $15-30 million to do just that! So switching to another data centre might not be such a good idea. It will be a costly move that involves time (to move) and business down time as well. Hence, it is safe to say that DLR's business is sticky and it can retain its clients fairly confidently.
Growth in 5G, and in demand for cloud storage, AI, IoT, virtual reality, autonomous vehicle etc should impact DLR positively.
Fair value according to SimplyWallSt is $235.64. Bought at $114.70.
Dividend yield: 3.63%.
Plan: buy and hold for dividends and capital appreciation, and accumulate more.
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