Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Digital Realty Trust Inc. Earnings: Sometimes No News is Good News

Source: Flickr / John McStravick. 

Digital Realty Trust (NYSE: DLR  )  delivered no groundbreaking news with its second-quarter report, but did put some strong results in the books.

Sitting at the intersection of old and new
Digital Realty Trust a real estate investment trust, or REIT, meaning it principally owns property and also offers a sizable dividend -- above 5% at the time of writing -- to its investors. Often these companies are among the more traditional, stable, and in many ways boring -- albeit in a good way -- investments available.

Yet at the same time, Digital Realty Trust is involved in the high-flying, fast-moving "big data" landscape: Instead of owning properties such as restaurants, strip malls, or apartments, it is "the world's largest data center REIT."

Its data-center properties are leased out to companies to meet their needs to store and process the information that makes their businesses run. Digital Realty's 10 biggest tenants include IBMFacebookAT&T, and other big names.

In many ways Digital Realty Trust sits at the intersection of the proverbial "old school" of property and the "new school" of data. Keep this in mind when reviewing its earnings results or considering an investment in the company.

Slow and steady wins the race
I say all of that because it's possible to conclude that since Digital Realty Trust operates in a rapidly growing and expanding industry, it should deliver staggering results. After all, since tenant Facebook recently saw quarterly revenue jump 61% year over year, investors can expect something similar from Digital Realty, right? 

But Digital Realty has a much more stable business. While it may not see astonishing growth akin to Facebook, that doesn't mean it can't deliver impressive returns to stockholders.

Source: Flickr / BobMical.

And that brings us to Digital Realty's second-quarter earnings. Revenue was up 10% relative to the second quarter of last year, to stand at $401 million.

While the growth in its core funds from operations was not as impressive, growing by less than 2% to $1.21 per share, the company still topped analysts' consensus expectation of $1.20.

Digital Realty also raised its full-year earnings guidance from the previously announced $4.80-$4.90 per share to $4.85-$4.95.

One of the most encouraging aspects of the report was that new leases signed represented $35 million in revenue, a sizable improvement from $16 million signed in the second quarter of last year. In addition, the company said it logged $10 million in revenue from renewal of leases, and for those customers the rental rates rose by 9% on a cash basis.

The key takeaway
Digital Realty Trust's second quarter was largely solid but seemingly unspectacular, as it had no real headline-grabbing results -- either positively or negatively. Yet with those REITs that deliver solid and reliable dividends, sometimes that's exactly what you need.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3068919, ~/Articles/ArticleHandler.aspx, 8/27/2015 3:28:35 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Patrick Morris

After a few stints in banking and corporate finance, Patrick joined the Motley Fool as a writer covering the financial sector. He's scaled back his everyday writing a bit, but he's always happy to opine on the latest headline news surrounding Berkshire Hathaway, Warren Buffett and all things personal finance.

Today's Market

updated Moments ago Sponsored by:
DOW 16,406.63 121.12 0.74%
S&P 500 1,958.39 17.88 0.92%
NASD 4,742.16 44.63 0.95%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/27/2015 3:13 PM
DLR $64.13 Up +0.85 +1.34%
Digital Realty Tru… CAPS Rating: ****