Please ensure Javascript is enabled for purposes of website accessibility

Instant Analysis: Digital Realty Trust Raises Its Dividend by 4%

By Eric Volkman - Feb 22, 2016 at 7:32PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The specialty REIT will pay out $0.88 per share, a 4% increase.

What happened?
Specialty real estate investment trust Digital Realty Trust (DLR -1.00%) is making its shareholders incrementally richer with a boost to its quarterly dividend. The REIT will pay $0.88 per share, 4% higher than the previous distribution.

As a REIT, Digital Realty Trust is obligated to hand out the bulk of its profits in the form of a dividend. Since the company's IPO in late 2004, this payout has risen from just over $0.15 per share to the present level. The REIT tends to enact its dividend raises near the beginning of every calendar year.

Digital Realty Trust's new payout will be dispensed on March 31 to stockholders of record as of March 15. At the current share price, it yields 4.3%.

Does it matter?
Investors will certainly like the extra few cents being added to the dividend, although Q4 and fiscal 2015 results will probably have more of an impact on the stock. There's still some breath-holding in that regard, as we have to wait until next Thursday for both sets of figures to be unveiled.

Based on its most recently reported quarter, Digital Realty Trust is continuing to do well. Dunds from operations (a key profitability metric for REITs) were $178 million, 5% higher on a year-over-year basis. This was on the back of revenue that improved by 6% to $436 million.

We can expect continued growth. Organically, the REIT should do better because demand for its services -- the provision of space in data centers -- is only going to grow in this increasingly connected world. Also adding heft to its results will be Telx, a peer company it bought for nearly $2 billion in a deal that closed late last year.

So we shouldn't anticipate much impact to the stock from the dividend hike. Let's see if the story's different when those results come down the wire.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Digital Realty Trust, Inc. Stock Quote
Digital Realty Trust, Inc.
DLR
$135.87 (-1.00%) $-1.38

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
332%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.