What would a dividend investor's dream stock look like? The obvious characteristic would be a high dividend yield. Of course, the dividend also would need to be one that's both sustainable and growing.

It also would be great if the underlying business was rock-solid with a strong competitive advantage. And since we're talking about a dream, excellent earnings growth prospects would be nice.

There are plenty of stocks that meet some of those criteria, but not all of them. However, you don't have to give up on finding a dividend stock that checks off all the boxes. Here's why Iron Mountain (IRM -0.17%) is a dividend investor's dream.

Clouds forming the words dividends written in a blue sky.

Image source: Getty Images.

Meet the dream

What do organizations do with all of the documents, data, and other important assets that they can't store internally? Many of them turn to Iron Mountain. The company ranks as the largest provider of records and data storage in the world. Iron Mountain claims over 225,000 customers in 53 countries, including around 95% of the Fortune 1000.

Iron Mountain began operations back in 1951 with an underground facility outside of Hudson, New York. Since then, the company has grown to more than 1,400 facilities with a staggering 87.5 million square feet of storage space.

In 2014, Iron Mountain reorganized as a real estate investment trust (REIT). One requirement of a REIT is that it must return at least 90% of its taxable income to shareholders in the form of dividends. And that's exactly what Iron Mountain has done.

The company's dividend currently yields 7%. Over the last three years, Iron Mountain increased its dividend by nearly 24%. Like I said, this stock is a dividend investor's dream.

Iron Mountain's dividend also appears to be as rock-solid as the company's name. Its free cash flow and earnings are increasing. The company expects to grow its dividend by at least 4% annually over the next several years. 

Playing offense and defense

The future for Iron Mountain appears to be even brighter than its past. The company enjoys a virtual monopoly in the records and data storage space, and the market is highly fragmented. Although there are plenty of competitors, none have the size and reputation of Iron Mountain.

Customers tend to stay with the company. From 2015 through 2017, it saw volume reduction from customers terminating contracts of only 2%, on average, each year. Half of the boxes stored in Iron Mountain facilities have been there for at least 15 years.

Not only is Iron Mountain playing a good game defensively by keeping customers, it also is on offense by continually looking to grow its business. The company probably would enjoy some growth even if it did nothing. Organizations across the world generate more records and data every day, which translates to an increased need for offsite storage.

However, Iron Mountain aggressively is pursuing other growth opportunities. It already is experiencing solid growth in emerging markets and should continue to expand in these markets through strategic acquisitions. The company also has moved into adjacent business opportunities with its acquisition of Artex Fine Arts Services, a leading provider of art storage.

Perhaps the most significant growth opportunity for Iron Mountain, though, is in operating data centers. The company closed on its acquisition of the U.S. operations of IO Data Centers in January and also bought two data centers in London and Singapore from Credit Suisse.

Any chinks in the armor?

Even dreams can have a few bumps in the road, though. Does Iron Mountain have some drawbacks? Sure.

The stock has dropped by 20% over the last six months. This decline stemmed primarily from Iron Mountain issuing new shares and taking on additional debt to help finance the IO Data Centers U.S. operations acquisition. Despite this recent pullback, Iron Mountain stock isn't cheap. Shares still trade at 52 times trailing-12-month earnings and 26 times expected earnings. And while Iron Mountain has solid growth prospects, you could definitely find plenty of stocks that should grow even faster. 

But we're not talking about a value investor's dream stock or a growth investor's dream stock. If you're a dividend investor, your dreams can come true with Iron Mountain.