If any area in the market has strong growth potential for 2017 and beyond, it is the data centers, and with good reason. With cloud computing and storage skyrocketing, and demand for streaming video and audio growing exponentially, the prospects for the top companies in the field continue to remain bright. Toss in the fact that almost all the top companies pay dividends, and the total return prospects are outstanding.

In a new research report, Stifel analysts note that their work indicates demand is currently more broad-based as opposed to last year, which they say was a record year for absorption driven by the inflection in cloud migration from mature enterprises from formerly reluctant chief information officers.

The analysts take a cautious stance and noted this:

Given the sharp correction in data center stocks last fall, we think investors should be braced for tepid fourth quarter leasing results, particularly in light of the November election, and ensuing uncertainty regarding potential policy changes under the Trump administration.

With that caveat in mind they do like four companies, all real estate investment trusts (REITs) rated Buy, into the earnings, which begin next week.

CyrusOne

A top pick across Wall Street among the data center stocks, CyrusOne Inc. (NASDAQ: CONE) designs, builds and operates facilities across the United States, Europe and Asia that give its customers the flexibility and scale to match their specific growth needs. Specializing in highly reliable enterprise-class, carrier-neutral data center properties, the company provides robust data center infrastructure to ensure the continued operation of IT equipment for a rapidly growing list of organizations that now nears 900, including nine of the Fortune 20 and more than 160 of the Fortune 1,000 or equivalent-sized companies.

Many analysts feel that some of the best returns in the data center sector may be found in the smaller players like CyrusOne. The company trades at numerous lower multiples than its bigger competition, and top analysts feel that the discount valuation is not warranted given the recent surge in leasing and above-average growth. The company also has exhibited faster deployment times, rapid new market expansion and low churn among customers, all bullish reasons for buying the stock.

CyrusOne unitholders receive a 3.16% distribution. The Stifel price target is a surprising $45, while the Wall Street consensus target is $54. The shares closed Tuesday at $48.16.

Equinix

This is one of the larger cap companies in the sector, and a top play for more conservative accounts. Equinix (NASDAQ: EQIX) provides data center services to protect and connect the information assets for the enterprises, financial services companies, and content and network providers primarily in the Americas, Europe, the Middle East, Africa and the Asia-Pacific.

The company provides colocation services and related offerings, including operations space, storage space, cabinets and power for customers colocation needs; interconnection services, comprising physical cross connect/direct interconnections, Equinix Internet Exchange, Equinix Cloud Exchange, Equinix Metro Connect and Internet connectivity services; and managed IT infrastructure services, including installation of customer equipment and cabling, as well as equipment rebooting and power cycling, card swapping and emergency equipment replacement services.

Investors are paid a 1.82% dividend equivalent. Stifel has a $418 price target, and the consensus target is $411.72. The shares closed most recently at $384.98.

Interxion

This company pays no distribution but is a top play for investors looking for European exposure. Interxion Holding N.V. (NYSE: INXN) builds and operates 39 carrier-neutral data centers in 11 countries across Europe, spanning nearly 100,000 square meters. The company services approximately 1,500 customers, consisting of network providers, managed service providers, financial services companies, digital media and distribution companies, and enterprises.

With over 600 connectivity providers, 21 European Internet exchanges and most leading cloud and digital media platforms across its footprint, Interxion has created connectivity, cloud, content and finance hubs that foster growing customer communities of interest.

The Stifel price objective is $45. The consensus price target is $41.31, and shares closed on Tuesday at $38.43.

QTS Realty Trust

This rounds out the four top pick data center REITs at Stifel. QTS Realty Trust Inc. (NYSE: QTS) is a leading provider of secure, compliant data center solutions, hybrid cloud and fully managed services. Its integrated technology service platform of custom data center, colocation and cloud and managed services provides flexible, scalable, secure IT solutions for web and IT applications.

Its Critical Facilities Management provides increased efficiency and greater performance for third-party data center owners and operators. QTS owns, operates or manages 24 data centers and supports more than 1,000 customers in North America, Europe and Asia Pacific.

QTS recently completed the purchase of a 260,000 square foot data center in Fort Worth, Texas, from Health Care Service Corp. The facility becomes QTS’s second mega data center in the broader Dallas-Ft. Worth market and strengthens its ability to serve Fortune 1000 enterprises as well as regional financial services, health care and technology companies.

QTS investors receive a 2.86% distribution. The $55 Stifel price target is less than the consensus target of $56.46. Shares closed at $50.39.

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It should be noted that these stocks have had big runs over the past month, so investors may want to scale in some capital, buy a partial position, and see if they don’t pull back some. It also is important to remember distributions from REITs may contain return of capital.

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