2 Data Center REITs That Look Good in Any Portfolio

Core Insights - REITs, or real estate investment trusts, are companies that own and operate income-producing properties, structured to pay out the majority of their profits as dividends, making them a reliable source of passive cash flow [1][2] - REITs provide exposure to property sectors that may be difficult for individual investors to access, helping to diversify portfolios dominated by individual equities, particularly tech stocks [2] - A growing segment of REITs specializes in data centers, which are critical for cloud computing and AI, presenting attractive investment opportunities [2][3] Equinix - Equinix is a leading global data center REIT with over 250 facilities across 33 countries, contributing to significant growth, with shares up more than 50% since October 2023 [4][5] - The company has a dividend yield of 2.42% and a strong dividend growth track record of 10 years, with a recent annual dividend of $18.76 [4][5] - Equinix's latest earnings report showed record revenue and profitability, with management raising forward guidance, indicating confidence in future performance [5][6] Digital Realty - Digital Realty Trust is another prominent data center REIT, with over 300 facilities worldwide and a share price increase of nearly 90% in less than three years [7] - The company offers a dividend yield of 2.99% and reported better-than-expected results, although shares have slipped more than 10% in August [7][8] - Analysts remain bullish on Digital Realty, with multiple firms reiterating Buy ratings, suggesting that current stock weakness is more related to market sentiment than fundamental issues [10]