Core Insights - The article emphasizes the importance of generating passive income through investments in dividend stocks, highlighting specific companies that provide stable cash flows and consistent dividend growth. Group 1: Brookfield Infrastructure - Brookfield Infrastructure owns a diversified portfolio of infrastructure businesses, including pipelines, toll roads, electricity transmission lines, and data centers, generating $2.6 billion in cash flow last year, with a dividend yield of 3.6% [3][4]. - The company has increased its dividend by 6%, marking its 17th consecutive year of dividend hikes, with expectations for continued income growth [4]. - Brookfield is investing heavily in expanding its infrastructure portfolio, including data centers and semiconductor foundries, and expects over 10% annual cash flow per share growth, supporting 5% to 9% annual dividend growth [5]. Group 2: Enterprise Products Partners - Enterprise Products Partners is a leading U.S. energy midstream company that operates pipelines and processing plants, offering a current yield of 6.2% and has increased its payment by 2.8% over the past year, extending its growth streak to 27 consecutive years [6]. - The company completed $6 billion in major expansion projects in the second half of last year, which will drive earnings growth in 2026, and plans to invest at least $2.5 billion into expansion projects this year [7]. - These expansion projects are expected to provide incremental cash flow sources, supporting continued distribution increases through the end of next year [7].

J P M O R G A N North America Equity Research 05 February 2026 Hardware & Networking Cloud Capex Wrap-Up: Another BIG Year of Spend in 2026 with Aggregate Hyperscaler Capex Tracking to $645 bn, Expanding +$230 bn AMZN followed GOOGL as well as META and MSFT in highlighting strong capex trends in the Dec-Q, with aggregate capex across the U.S. hyperscalers expanding by +12% quarter over quarter and +60% year over year to $127 bn. All four of the U.S. CSPs continue to highlight robust capex growth expectation ...

Company Overview - Digital Realty Trust, Inc. (NYSE:DLR) is a significant player in the real estate investment trust (REIT) sector, focusing on data centers that support global digital infrastructure [1] - The company competes with major REITs such as Equinix and CyrusOne, aiming to meet the growing demand for data storage and processing [1] Analyst Ratings and Price Targets - Cowen & Co. has maintained a "Hold" rating for Digital Realty, with the stock currently priced at $164.65, while TD Cowen raised its price target from $179 to $185, indicating a positive outlook [2][5] - The consensus recommendation from twenty-six ratings firms is a "Moderate Buy," with an average 12-month price target of approximately $193.21 [2][5] - Among analysts, nine have rated DLR as a hold, fifteen recommend buying, and two suggest a strong buy [3] Stock Performance - DLR's current stock price is $164.65, reflecting a decrease of 1.28% or $2.14, with trading between $162.61 and $167.89 on the day [4] - Over the past year, the stock reached a high of $182.48 and a low of $129.95 [4] - The market capitalization of DLR is approximately $56.56 billion, underscoring its significant position in the REIT sector [4][5]

Core Viewpoint - The world's largest owner of industrial real estate is considering a co-investment vehicle that will focus on data centers to capitalize on the growing AI boom [1] Group 1 - The company aims to leverage the increasing demand for data centers driven by advancements in artificial intelligence [1]

Core Viewpoint - Long delays in obtaining power grid connections are hindering Amazon's plans to expand its data centers in Europe, prompting industries to urge policymakers to modernize the aging energy infrastructure [1] Group 1: Company Impact - Amazon is facing challenges in its data center expansion plans in Europe due to prolonged delays in securing power grid connections [1] - The company has communicated these challenges to Reuters, indicating a significant impact on its operational strategy in the region [1] Group 2: Industry Context - Industries are increasing pressure on policymakers to upgrade the aging energy infrastructure, highlighting a broader concern that affects multiple sectors [1] - The situation reflects a critical need for improvements in energy connectivity to support technological advancements and data center operations [1]

Group 1: Company Overview - Prologis is a real estate investment trust (REIT) specializing in industrial properties, particularly large-scale distribution centers, owning about 6,000 properties across four continents, totaling 1.3 billion square feet of rentable space [3] - Prologis is the largest REIT globally, with an estimated 3% of global GDP flowing through its distribution centers each year [3] Group 2: Tenant Information - Amazon is the largest tenant of Prologis, followed by The Home Depot and FedEx, with a total of 6,500 companies relying on Prologis properties for logistics needs [4] Group 3: AI Potential - Prologis is expanding into data centers, which are essential for the AI revolution, by forming a new $25 billion data center development arm and increasing its data center power pipeline to 5.7GW of capacity [6] - The global data center market is projected to grow from $384 billion in 2025 to over $900 billion by 2033, positioning Prologis to capitalize on this opportunity due to its financial flexibility and scale [7] Group 4: Financial Metrics - Prologis currently trades at about 21 times funds from operations (FFO), with 6% same-store net operating income growth, 27% cash rent growth on new and renewal leases, and a 3.1% dividend yield [8]

Core Insights - Microsoft is expanding its data center operations by constructing 15 additional data centers in Mount Pleasant, Wisconsin, which will enhance its capacity to recognize revenue from clients like OpenAI [1][2]. Group 1: Expansion Plans - The new data centers will cover almost 9 million square feet and are expected to have a taxable value exceeding $13 billion [5]. - The Mount Pleasant village board has unanimously approved the plans for the new data centers, indicating local support for Microsoft's expansion [6]. Group 2: Community Response - While many residents in Mount Pleasant support the expansion, there has been opposition in the adjacent village of Caledonia, where residents protested against Microsoft's request to rezone land for a data center [4]. - Concerns were raised during public comments about the permanence of jobs created by the data centers, but local officials defended the long-term nature of the employment opportunities [6][7]. Group 3: Industry Context - Microsoft is competing with Amazon, Google, and Oracle in the race to build data centers equipped with Nvidia chips for generative AI applications [2]. - The construction of data centers faces challenges, including the availability of energy from utilities and local opposition from residents [2].

Core Viewpoint - The article highlights three high-quality dividend stocks—Brookfield Infrastructure, ExxonMobil, and Prologis—that offer attractive yields above 3% and are expected to continue increasing their dividends due to strong business fundamentals and financial profiles [1][14]. Group 1: Brookfield Infrastructure - Brookfield Infrastructure has a dividend yield of approximately 3.8% and operates a diverse portfolio across utilities, transportation, energy midstream, and data sectors, generating stable cash flows backed by long-term contracts [2][5]. - The company aims to distribute 60% to 70% of its stable cash flows as dividends while retaining the rest for reinvestment, with a backlog of $7.8 billion in capital projects expected to be completed in the next two to three years, primarily in the data segment [3][5]. - Brookfield has secured $1.5 billion in new business deals over the past year and anticipates growing its funds from operations by over 10% annually, which should drive dividend increases of 5% to 9% each year [5][14]. Group 2: ExxonMobil - ExxonMobil has a dividend yield of just over 3% and benefits from a large-scale, integrated business model that mitigates the impact of oil price volatility on earnings [6][8]. - The company expects to achieve $25 billion in earnings growth and $35 billion in cash flow growth by 2030, driven by structural cost savings and high-return capital projects [8][9]. - ExxonMobil plans to generate approximately $145 billion in cumulative surplus cash over the next five years, allowing for continued dividend increases, having raised its dividend for 42 consecutive years [9][14]. Group 3: Prologis - Prologis offers a dividend yield of 3.2%, supported by stable cash flows from long-term leases that typically include annual rental escalations [10][12]. - The REIT maintains a conservative dividend payout ratio and a strong balance sheet, providing financial flexibility for portfolio expansion through development projects and acquisitions [12][13]. - Prologis primarily invests in logistics properties and aims to leverage its land bank and expertise in developing data centers, which should facilitate ongoing dividend growth, having increased its payout at a 13% compound annual rate over the last five years [13][14].

Financial Data and Key Metrics Changes - Q4 core FFO was $1.44 per share, finishing at the top end of guidance ranges [10] - Average occupancy was 95.3% for Q4 and 95% for the full year, with period-end occupancy at 95.8% [10] - Same-store NOI growth was 4.7% on a net effective basis and 5.7% on a cash basis, exceeding guidance [11] - Net effective rent change for the year was over 50%, with a quarterly change of 44% [10][11] Business Line Data and Key Metrics Changes - The company signed 57 million sq ft of leases in Q4, driving occupancy towards 96% [9] - Development platform, particularly build-to-suits, exceeded expectations, capturing significant market share [9] - The Data Center business saw a growing power pipeline, with expectations for solid starts in the upcoming year [9] Market Data and Key Metrics Changes - Q4 net absorption was 59 million sq ft in the U.S., leading to a decline in U.S. vacancy to 7.4% [14] - Many markets are experiencing a slowdown in rent decline, with some showing positive growth [14] - International markets, particularly in Latin America and Europe, are outperforming, with strong occupancy and rent growth [16] Company Strategy and Development Direction - The company focuses on three priorities: extending leadership as a best-in-class operator, capturing value creation opportunities in logistics and data centers, and enhancing shareholder returns through growth in assets under management [7][8] - The company aims to develop critical infrastructure in logistics and data centers, leveraging customer relationships and expertise [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational momentum and strategic initiatives in place for 2026, indicating a strong position for long-term growth [22] - The tone of customer conversations is increasingly positive, with e-commerce driving demand [15] - Management noted that while uncertainties exist, they are treated as planning assumptions rather than impediments [15] Other Important Information - The company sold approximately $900 million of value-maximized assets and acquired $625 million at attractive discounts [11] - The company achieved significant milestones in strategic capital, including the IPO of the China AMC Prologis Logistics REIT [17] Q&A Session Summary Question: Changes in strategic initiatives with new leadership - Management highlighted a focus on compounding the core logistics business while broadening the platform, with plans to grow strategic capital significantly [24][25] Question: Market rent growth expectations for 2026 - Management expects net absorption to approach 200 million sq ft in 2026, with vacancies declining to 7.1%-7.2% by year-end [33] Question: Data Center project details and guidance - Management indicated that 40% of the overall development starts guidance will be in Data Centers, with a mix of powered shell and turnkey projects [38] Question: Update on the 10 GW power outlook - Management remains confident in the 10 GW pipeline, emphasizing the significant opportunities available [43] Question: Capital deployment pipeline and ramp-up - Management noted that capital deployment decisions are made based on market conditions, with a significant number of opportunities available [56][57] Question: Same-store growth guidance breakdown - Management indicated that occupancy gains are expected across geographies, with a smaller contribution from mark-to-market as rent changes normalize [79]

Financial Data and Key Metrics Changes - Fourth quarter core FFO was $1.44 per share, finishing at the top end of guidance ranges [10] - Average occupancy was 95.3% for the quarter and 95% for the full year, with period-end finishing at 95.8% [10] - Net effective rent change was 44% for the quarter, contributing approximately $60 million of annualized NOI, with a full-year net effective rent change exceeding 50% [10] - Same-store NOI growth was 4.7% on a net effective basis and 5.7% on a cash basis, each ahead of guidance midpoint [11] Business Line Data and Key Metrics Changes - The company signed 57 million sq ft of leases in the quarter, driving occupancy toward 96% [9] - Development platform, particularly in build-to-suits, continues to outperform, with $1.1 billion in new buildings started in the quarter [12] - In strategic capital, two new investment vehicles were formed in the U.S. and China [9] Market Data and Key Metrics Changes - Fourth quarter net absorption was 59 million sq ft in the U.S., with a decline in U.S. vacancy to 7.4% [13][14] - Many markets are beginning to see expansion as market rent growth starts to outpace portfolio churn [11] - International markets, particularly in Latin America and Europe, are outperforming, with strong occupancy and ongoing rent growth [16] Company Strategy and Development Direction - The company focuses on three priorities: extending leadership as a best-in-class operator, capturing value creation opportunities in logistics and data centers, and enhancing shareholder returns through growth in assets under management [6][8] - The company aims to develop critical infrastructure with a growing power pipeline and deep customer relationships [7] - Strategic capital partners are increasingly seeking fewer managers who can deliver consistent performance across geographies and strategies [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational and financial results despite challenges in 2025, highlighting the strength and resilience of the platform [20] - The company anticipates positive rent growth to emerge more clearly over the course of 2026, with market vacancies expected to improve [30][31] - Management noted that e-commerce remains a significant driver of demand, representing approximately 20% of new leasing activity over the last year [15] Other Important Information - The company achieved significant milestones in strategic capital, including the IPO of the China AMC Prologis Logistics REIT [17] - The installed capacity in the energy business reached 1.1 gigawatts, surpassing the previous goal [12] Q&A Session Summary Question: Changes in strategic initiatives with new leadership - Management emphasized a focus on compounding the core logistics business while broadening the platform, with plans to grow the strategic capital area significantly [22][24] Question: Market rent growth expectations for 2026 - Management expects net absorption to approach 200 million sq ft in 2026, with vacancies declining to 7.1%-7.2% by year-end [30][31] Question: Data center project details and guidance - Approximately 40% of the development starts guidance for 2026 is expected to be in data centers, with a small number of imminent projects [35] Question: Clarification on occupancy growth and FFO growth limits - Management expressed confidence in occupancy growth despite potential downticks, with a forecast of a 25 basis points increase in average occupancy [43] Question: Capital deployment pipeline and ramp-up - Management highlighted a significant number of opportunities and the ability to make decisions based on market conditions [51][52] Question: Same-store growth guidance breakdown - The guidance reflects a mix of occupancy gains and mark-to-market improvements, with occupancy drag expected to lessen over time [64]