My investing strategy is a pretty simple one, and it goes something like this: Assemble a diverse mix of quality stocks with strong growth potential, and leave those stocks alone for many years. It's a strategy I've employed with numerous tech stocks that have enjoyed massive gains over the past decade and change, and it's a strategy I continue to stick with in my quest to continue branching out.
This year, I've added a number of REITs, or real estate investment trusts, to my portfolio. What I like about REITs is that they let me invest in real estate without owning actual property.
While I don't consider myself particularly risk-averse, I'm not sure I have the stomach for owning and managing income properties. There's a lot of downside and a lot of work there that, frankly, I'm not sure I'm up for -- and so I've been loading up on REITs instead.
Earlier this year, I scooped up shares of Digital Realty Trust (DLR 0.67%) when the broad market was flopping around in correction territory and shares were mildly discounted. Meanwhile, shares of Digital Realty Trust are now up 10% over the past month. But I'd still like to scoop up more for one key reason.
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Data centers could really explode
Digital Realty Trust is a REIT that owns a sizable network of data centers. Now to be clear, operating data centers is hardly straightforward. These properties have specific needs, from physical security to climate control. And there's a cost involved there. But I'm still convinced Digital Realty Trust is a good buy now for one key reason -- the need for data centers is likely to explode in the coming years.
The world we live in is going increasingly digital. Banks, retailers, healthcare, and other industries are coming to rely more and more on data -- secure data -- to function. And as more companies adopt flexible work arrangements in the wake of the pandemic that have employees doing their jobs remotely from different corners of the country and globe, those companies are going to need a way to share, transmit, and store data.
That's precisely why I'm convinced Digital Realty Trust is only poised for growth. First established in 2004, Digital Realty Trust has increasingly expanded its footprint through the years. The company currently operates more than 290 data centers across the world, and it doesn't seem to be slowing down.
Meanwhile, Digital Realty Trust's stock price is up over 29% in the past five years. That's not explosive growth -- especially when there are tech stocks up 200% or more during that same time frame. But that's actually why I want to buy more of Digital Realty Trust now -- because I don't think it's realized its full potential, and I want to get in before that happens.
A decent dividend to boot
While my investment strategy doesn't hinge on chasing dividends, I consider them a nice thing to have. With a 3.34% annual dividend yield, Digital Realty Trust is hardly the most generous REIT from a dividend perspective. But its dividend yield isn't negligible, either. And since I don't rely on dividends for actual income, I'm able to reinvest whatever money trickles in to fuel my portfolio's growth.
Should you buy Digital Realty Trust?
There are plenty of REIT sectors with solid growth potential, but I think now's a great time to invest in data centers. As everything from retail to education moves online, the need for data storage is only apt to grow, so I'm eager to take advantage of that opportunity at just the right moment.
