Top analysts cite the solid dividend and the potential for dividend growth. Many also feel that data center pricing is still favorable and the growth in adoption of the cloud is a huge 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 in 2020.
Digital Realty offers investors a very solid 3.37% distribution. Merrill Lynch has a price target of $140, and the posted consensus target is $126.19. The stock was last seen trading at $128.26 a share.
This is one of the larger capitalization companies in the industry and a top pick. 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.
Equinix investors are paid a 1.66% distribution. The $630 Merrill Lynch target price compares with the $514.87 consensus price objective. The last trade on Friday came in at $591.96 a share.
QTS Realty Trust
This is a top pick data center real estate investment trust that has been mentioned as a takeover target in the past. 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 3.08% distribution. Merrill Lynch has set its price target at $56. The consensus target is $47.19, and the shares closed at $57.21 on Friday.
These top stocks are very solid total return plays in an industry that sees very little sign of slowing down. The good news for investors is that Intel’s huge growth should indicate that demand is still big for data center capacity. In addition, most of these stocks have come way off the 52-week highs that were posted last year, and all are also good income ideas as well.
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