Analysts cite Digital Realty’s solid dividend and the potential for dividend growth. They also feel that data center pricing is still favorable, and the growth in adoption of the cloud is a positive going forward. Lastly, some on Wall Street feel the stock is underweighted by active managers and could see an uptick if they started adding shares.
Digital Realty offers investors a very solid 3.20% distribution. The Stifel analysts lifted its price target to $143 from $130, while the posted consensus target price is $126.19. The shares were last seen trading at $135.74 on Wednesday.
This is one of the larger capitalization companies in the industry and a top pick at Stifel. Equinix Inc. (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 in Equinix are paid a 1.73% distribution. The $610 Stifel target price was held steady and compares with the $514.87 consensus price objective, as well as the most recent closing price of $566.62 a share.
QTS Realty Trust
This is another top pick data center REIT and could be a potential takeover target. 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.
The company’s Critical Facilities Management (CFM) 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 investors receive a 3.35% distribution. Stifel has raised its price target to $56 from $53. The posted consensus target price is $47.19, but the shares closed above that level on Wednesday, at $52.67 apiece.
These top companies offer very solid total return plays in an industry that sees little sign of slowing down. Their shares have rallied this year, and with third-quarter results coming in soon, it may make sense to buy partial positions here and see how the results shake out.