The AI Boom Has a Landlord. These 3 REITs Are Getting Paid

AI and cloud software need physical buildings to run in, and the hard part is getting enough power and network connections into them. The Department of Energy projects data centers will account for up to 12% of U.S. electrical demand by 2028, and the landlords that already hold powered, connected capacity are being paid for it. Equinix (NASDAQ:EQIX) added a record 9,700 net interconnections in Q2 2026, and annualized gross bookings rose 23% YoY to $424M. All three REITs below are equity REITs: they own the buildings and collect rent from tenants. None of them is a mortgage REIT, the kind that holds property loans and takes on interest rate and credit risk that landlords avoid.

One note on how we measure safety. A REIT’s net income is reduced by large depreciation charges on its buildings, so a standard earnings payout ratio makes a REIT dividend look riskier than it is. The better yardstick is funds from operations (FFO), or adjusted FFO (AFFO), which adds back depreciation and subtracts the recurring capital spending needed to maintain the properties. Every coverage figure below is based on FFO or AFFO.

All three offer moderate yields, which makes this a group built on dividend growth, and the coverage numbers back that up.

Equinix: Best AFFO Coverage and a Dividend That Grows With It

What it owns: Equinix runs its IBX colocation data centers worldwide, where enterprises, cloud providers, and networks rent space and connect directly to each other. In Q2 2026, revenue split into Americas $1.251B, EMEA $845M, and Asia Pacific $529M. The company operates 194 stabilized assets that were 82% utilized and earned a 27% cash-on-cash yield on gross property and equipment.

Demand backdrop: Management said “Eight of the top 10 model providers, as well as eight of the top 10 neoclouds, are already running their key networking workloads on Equinix today.” Q2 revenue rose 16.4% YoY to $2.625B, beating the $2.582B consensus, and monthly recurring revenue grew double digits for the third straight quarter. Chief executive Adaire Fox-Martin said “Demand is clearly exceeding the assumptions in our prior long-term outlook.”

Yield and coverage: At $995.90, the $20.64 forward dividend yields 2.07%. Raised 2026 guidance calls for AFFO per share of $42.69 to $43.29, so the dividend uses about 48% of the midpoint. Equinix expects to pay about $2.039B in cash dividends against $4.240 to $4.300B of AFFO. The quarterly payout went from $4.69 in 2025 to $5.16 in 2026.

Bull case: Through 2029, management targets 10% to 13% annual revenue growth, 9% to 12% annual AFFO per share growth, and dividend growth that roughly tracks AFFO per share growth. The company says all three gigawatts of land it controls either has contracted power or a high degree of confidence that power will be contracted. The shares are up 31.95% year to date.

Risk: The buildout is expensive. Annual capex is guided to $5 billion to $7 billion through 2029, and management expects leverage to rise about one turn from 3.6 times while its blended cost of capital climbs about 150 basis points. On top of that, Equinix has 52 expansion projects across 33 markets to deliver on schedule.

Digital Realty: Record Leasing, Frozen Dividend

What it owns: Digital Realty (NYSE:DLR) operates more than 300 data centers worldwide serving about 6,000 customers, from single-cabinet deployments to entire hyperscale campuses. It has 1.4 gigawatts under construction at a total development cost of $20 billion, with more than 80% of it in the Americas, including Northern Virginia, Charlotte, Atlanta, São Paulo, and Kansas City.

Demand backdrop: In Q1 2026, Digital Realty signed a 200-MW AI inference lease, the largest hyperscale deal in its history. In Q2, total backlog hit a record $1.4 billion at Digital Realty’s share, about 30% of in-place data center revenue, and the development pipeline was 63% pre-leased at an expected stabilized yield of 11.5%. Cash renewal spreads topped 25%, a record. Management also secured 600 megawatts of utility power in Kansas City, with delivery scheduled to begin in early 2028.

Yield and coverage: The $4.88 annual dividend yields 2.84% at $172.09. Digital Realty reports Core FFO, and its 2026 guidance excluding promote income is $8.15 to $8.20 per share. That puts the payout at about 60% of the midpoint. Keep in mind that FFO does not subtract recurring capital spending, so coverage on an AFFO basis would be somewhat tighter. Income investors should also notice that the quarterly dividend has been stuck at $1.22 for every ex-dividend date from 2022-03-14 through 2026-09-15, even as Core FFO excluding promote income grew 14% YoY in Q2.

Bull case: Management expects to extend double-digit Core FFO per-share growth into 2027 and beyond, and it raised its 2026 cash renewal spread outlook to 9% to 11%. A wider gap between Core FFO and a flat dividend gives the board plenty of room to resume increases.

Risk: The big leases come from a handful of tenants. Management said its largest hyperscale signings over the past 10 quarters came from six different top hyperscalers, and it called this leasing “episodic from quarter to quarter.” The company is also issuing shares to pay for growth: it sold 7.3M shares via ATM for ~$1.3B net, and net capex is guided to $4.25 billion to $4.75 billion. The stock is up just 2.97% over the past year.

Iron Mountain: Records Storage Cash Funds a Hyperscale Push

What it owns: Iron Mountain (NYSE:IRM) is a hybrid. Its physical records storage business generated $1.4 billion of Q2 revenue at a 43% adjusted EBITDA margin, with storage retention of 93.4%. That steady cash flow pays for a fast-growing data center portfolio spanning Northern Virginia, London, Madrid, Miami, Amsterdam, New Jersey, and Mumbai.

Demand backdrop: Q2 data center revenue rose 39% to $263 million at a 52.2% adjusted EBITDA margin. Iron Mountain has leased 110 MW year to date through July, including a 51 megawatt lease in Mumbai with a major global hyperscaler on a 10-year contract and a 25 megawatt lease in London. Renewal spreads were +12% cash. About 325 megawatts of leasable capacity is expected to energize over the next 24 months, and the backlog supports $370M of incremental revenue beyond 2026.

Yield and coverage: The $0.864 quarterly dividend annualizes to $3.456, a 3.12% yield at $110.86, the highest of the three. The trailing four-quarter AFFO payout ratio is 60%, in line with the company’s target in the low 60s percent. 2026 AFFO per share guidance was raised to $5.87 to $5.93. The latest 10% increase marked the fourth consecutive year of dividend growth.

Bull case: Iron Mountain makes money across the full life of a data center. It leases capacity to hyperscalers, then gets paid to decommission their servers when they upgrade. Asset lifecycle management revenue rose 88%, and growth businesses now make up 35% of total revenue. The shares are up 36.69% year to date.

Risk: The balance sheet is the weakest of the three. Net debt stands at $17.3B, shareholders’ equity is negative at $(955M), and net lease-adjusted leverage is 4.8 times. Iron Mountain’s newest $1.5 billion bond carries a 6.25% coupon, a reminder that its growth is paid for with expensive borrowed money. Management also warned that its hyperscale leases “tend to be lumpy in nature.”

Ranking These Three Data Center REITs on Dividend Safety

For retirement income, Equinix leads this group: it has the lowest AFFO payout, a dividend that management has tied to AFFO growth, and the most moderate leverage. Iron Mountain pays the most, with a payout that AFFO still covers comfortably, but it carries the heaviest debt. Digital Realty is leasing faster than either of them, yet its dividend has not moved in four years, so retirees counting on rising income are waiting on the board. All three were down more than 3% over the past week. Over the next few quarters, the numbers to watch are AFFO per share growth and the cost of new debt, since those will tell you whether payouts keep rising.

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