There are some stocks that can produce an excellent combination of growth, income, and reliability, and Digital Realty Trust (DLR -0.76%) definitely fits into this category. In this Fool Live video clip, recorded on Sept. 23, Fool.com contributor Matt Frankel, CFP, discusses why investors should take a closer look at this tech-focused real estate company.
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Matt Frankel: This is the AI [artificial intelligence] market: the total AI software market. In 2020, you could see us just over $22 billion in size. By 2025, it's expected to about 6x in size to $126 billion. You said data center revenue from Nvidia is up 124% year over year. But that could just be a starting point when you look at a chart like that. That's why I wanted to talk about my stock, which is Digital Realty Trust, ticker symbol is DLR. They are one of the largest real estate companies in the world. I mentioned I'm a real estate guy, so I'm going to approach AI from the real estate angle.
Data center, if you're not familiar, think of these as the physical homes for the internet. Anytime you upload a photo album to your Facebook or you're downloading content from Netflix or accessing a website or having a Zoom meeting like we're doing right now, all of that content has to physically live somewhere, and that's where data centers come in. These are secure and reliable places where companies can house networking equipment.
Data centers, for example, will say they have something like a 99.999% up-time. I don't know about you, but my internet is not working 99.99% of the time. So it's a big selling point to these big tech companies who need their product or their websites to be available 100% of the time or very, very close to it. Digital Realty is one of the largest real estate companies in the world. Their market cap's around $46 billion.
They own 291 data centers all over the world. Most of their biggest presence is in the U.S., but they are also the big European presence and a big Asian presence. They build these massive facilities that are built to really be always on when it comes to Internet service, really secure environments, unhackable, I guess you would say. They lease their space, and just to give you an idea, I'm going to share my screen again, so bear with me on this screen share and stuff.
This is Digital Realty's top 20 customers. They have over 4,000 customers. About half of their revenue comes from their top 20, so it's worth pointing that out. Very top-heavy business. Some of their customers don't let Digital Realty tell who they are, including No. 1, you see that Fortune 50 software company. There are really so many software companies of the top 50, you could probably narrow it down if you really wanted to. Nos. 2 and 3, IBM, Facebook, Oracle, big customer of theirs. One of the real interesting points, if you look at No. 6, Equinix, that's the biggest data center provider in the world. They lease space from Digital Realty. Cyxtera is the No. 3 data center provider in the U.S., daily space from Digital Realty. The financial sector needs a lot of server space. You see JPMorgan Chase's on their top 20. Verizon and AT&T, obviously they have a lot of data flowing around the world, need a lot of space to put it.
That's what data centers do. I don't really want to get too deep in the weeds on how they work. I noticed people's eyes glaze over when I say things like co-location and cross-connects and things like that. But that's the basic idea. Digital Realty is, as I mentioned, the No. 2 data center company. Equinix is No. 1. Digital Realty's my preference because they own most of their data centers. You see Equinix leases a lot of space from them. Cyxtera leases a lot of space from them. Digital Realty owns 86% of its data center properties. Especially with some of its foreign data centers like in Asia, it uses leasing and subleasing model. But there's a ton of potential here.
The volume of data flowing around the world has just grown exponentially over the past few years. Think of how many connected devices are in your house now compared to 10 years ago. I'm looking at my home office and I can see a vacuum cleaner, a doorbell, a printer. All these things that are connected to the Internet, and all of them have data flowing in and out of them. This trend has really just accelerated in the past few years. Thanks to data-heavy markets like autonomous vehicles, like augmented reality, and like artificial intelligence, which is where a lot of Digital Realty's revenue comes from. Artificial intelligence devices use tons and tons of data. It's only going to get more sophisticated as the 5G rollout proceeds across the U.S.
So far, the performance of Digital Realty has been very impressive. I know [Motley Fool contributor] Rachel [Warren] mentioned that Nvidia is a lower-risk way to play the AI market. This is as well, and it's also a good one if you're an income investor. Digital Realty, because it's a real estate stock, they're known for their high dividends, pays a 3% dividend yield right now. The company went public in 2005. It has increased its dividend at an average rate of 10% a year since 2005. It started out paying $1 a year, now it pays almost $5 a year. Not only is it a great income stock, but it's giving you raises over time.
If I were closer to retirement, I would really, really love this stock. It's not just about the dividends. Their space has become much more valuable over time as the need for secure places to transmit data has grown. Let me just show this, last screen shot, I promise. This is Digital Realty. If you think real estate is boring, think again. This is Digital Realty against the S&P since its IPO in 2005. Digital Realty has produced a 2,500% total return for investors in about 17 years. That's a 21% annualized return sustained over that period of time.
This isn't due to one or two big spikes. You see that's a pretty steady return over time. The orange bar is the S&P, so it's delivered more than five times the return of the S&P since going public in 2005. That's pretty much a straight bull market for the past 11 years. Really impressive track record. It's going to be a Dividend Aristocrat once it's old enough. You have to be around for 25 years to be a Dividend Aristocrat. Just a really great way to play AI from both the growth and income perspective.