One of the Best Ways to Generate Income from this Booming Tech Sector

The cloud-computing market absolutely dominated last year. 

In 2020 alone, market research company Gartner said spending on public cloud services is estimated to have grown 6.3% to $257.9 billion.

Market intelligence firm IDC added cloud-based spending also accounted for 60% to 70% of all information technology infrastructure and software. 

Social-distancing measures, restrictions, and broader lockdowns played a major role in fueling the industry’s strong growth. However, the transition to cloud computing was already beginning to take place well before last year. 

Just take a look at Microsoft’s (NASDAQ: MSFT) Azure or Amazon’s (NASDAQ: AMZN) Amazon Web Service (AWS)…

From 2018 to 2019, Microsoft grew its cloud revenue from $10.5 billion to $17.4 billion. Meanwhile, between 2017 and 2019 Amazon grew AWS sales from $17.46 billion to $$35.03 billion. 

And this growth continued well into 2020…

In October, Microsoft reported its cloud segment surged 31% year-over-year. Amazon posted similar results showing a growth of 29% in the same period. 

Yet, this boom didn’t simply benefit some of the biggest technology stocks around.

The industry’s strength trickled to other sub-sectors – many of which play a pivotal role in providing the infrastructure needed to make the cloud work in the first place. 

You see, the cloud is really just a series of large computer warehouses located all over the world.

While companies such as Microsoft and Amazon develop the digital architecture, they still require space to build out server farms that house hundreds of servers.

This stands true for other major companies such as Netflix (NASDAQ: NFLX), Alphabet’s Google (NASDAQ: GOOGL), and more. 

The purpose of these server farms is to safely and securely maintain businesses as well as individuals’ data while providing remote access to the information 24/7.

That makes these facilities crucial to the entire cloud market – one that will continue to see an increase in demand in the years to come. 

To help investors capitalize on this incredible market, I’m bringing you one of the best data center stocks that’ll likely continue to see strong momentum moving forward…

This Data Center REIT is a ‘Must Have’ Cloud Investment 

Digital Realty (NYSE: DLR) is a real estate investment trust (REIT) that owns and operates server farms that make the cloud possible. 

finviz dynamic chart for  DLR

This means the company owns and manages a large number of data center facilities that it leases out to other big technology companies.

And as the cloud-computing industry continues to see increased adoption, investors win out by being exposed to Digital Realty’s diversified properties from companies in the telecommunications, healthcare, and financial sectors. 

This makes it a safe option for investors interested in the cloud as well. If one industry experiences volatility or disruptions, Digital Realty’s overall portfolio will be relatively unaffected. 

Plus, the data center company offers all the standard benefits of being a REIT. The firm is required by law to pay 90% of its taxable income from rent to investors as a dividend.

Right now, DLR is paying a healthy 3.3% dividend – which is more than double what the average S&P 500 company will give you today (1.5%).

And the fact that it continues to post strong quarterly results makes it an even better investment…

In the third quarter, Digital Realty reported funds from operations (FFO) of $1.54 compared to Wall Street’s anticipated $1.48 per share. The company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) were $568 million, beating the consensus of $539.8 million. 

The data center REIT expects this growth to remain strong in its 2020 report. Digital Realty raised its full-year 2020 FFO to $6.10 to $6.15. Analysts originally anticipated an FFO of $6.01.

Meanwhile, the company increased its revenue forecast from $3.78 billion to $3.83 billion to $3.85 billion to $3.88 billion. Digital Realty’s EBITDA is poised to be between $2.15 to $2.18 compared to its previous estimate of $2.10 to $2.13. 

These numbers, combined with DLR’s ‘must-have’ business in the cloud-computing industry, has pushed several investment firms to raise their outlooks on the company’s shares.

Citigroup, Mizuho Securities, Deutsche Bank, KeyBanc, and TD Securities have all recently upgraded Digital Realty’s shares to a “buy” – saying the data center REIT still has plenty of room to grow.