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Last up is
Digital Realty Trust(DLR - Get Report), one of my favorite real estate investment trusts. Digital Realty is a commercial real estate landlord that owns 16.8 million square feet of leasable space used for datacenters, internet gateways, and manufacturing facilities for technology firms.
Digital Realty's niche focus gives it some big advantages. For starters, demand for internet data centers and gateways continues to grow as data-driven services (like cloud storage) continue to grow in popularity. As long as firms need more virtual space to store data, they'll also need more physical space to store servers; that's space that DLR is uniquely qualified to provide. And as a result, switching costs are high for tenants who decide to lease space from Digital Realty.
The firm's legal status as a REIT effectively means that it's a purpose-built income generation machine. Like other commercial REITS, the firm leases properties on a triple-net basis, leaving costs like maintenance, taxes and insurance up to tenants.
DLR is obligated to pay out the vast majority of its income directly to investors in the form of dividends, one reason for the firm's massive 4.55% yield. Investors looking for real estate exposure could do a lot worse than this dividend winner.
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-- Written by Jonas Elmerraji in Baltimore.