Inflation just hit its highest level since 1982…
According to the Bureau of Labor Statistics’ Consumer Price Index (CPI), inflation rose more than expected in January. The CPI, which tracks the prices of goods and services, surged by 7.5% year over year.
That figure is higher than the Dow Jones consensus of 7.2%. It’s also the highest level inflation has been since February 1982.
This was largely due to a sharp rise in food, fuel, and housing costs. During the period, food costs jumped by 0.9% and are up 7% for the year.
Meanwhile, oil prices surged by 9.5% in January, bringing the total 12-month rise to 27%. And housing costs increased by 0.3%, raising the category up by 4.4% for the year.
This has many analysts concerned that inflation may not peak as soon as expected. That’s because institutional investors anticipated inflation numbers would come in lower than the forecasts.
However, with the figure coming in even higher than what was feared, investors are beginning to sell off once again, sending the tech-heavy S&P 500 down by 1.51% on February 10.
Meanwhile, the Dow Jones, Russell 2000, and Nasdaq all declined by 1.28%, 1.40%, and 1.68% following the report.
Because of this, many people are further piling into value stocks, safe-haven assets, and cyclicals. And this is propping up REITs like Digital Realty Trust (DLR).
Digital Realty (DLR) is a real estate investment trust (REIT) that invests in carrier-neutral data centers around the world.
The company owns more than 291 data centers. It also has 4,000 corporate and government customers. Though, it primarily provides services for Fortune 500 companies.
This includes Comcast (CMCSA), Meta Platforms (FB), JPMorgan Chase (JPM), Microsoft (MSFT), Oracle (ORCL), and Verizon (VZ) – making Digital Realty one of the largest real estate stocks in the U.S.
And with a customer-retention rate of more than 80%, it’s no surprise why. This enables it to constantly expand its number of facilities, but also regularly increase its funds from operations.
This means that while it has a major presence in the U.S., it’s also setting up shop in a variety of key growth markets that could bolster its financials, increase its dominant position in the space, and send its share value higher.
Yet, with a dividend yield of 3.3%, it also offers investors passive income as well as protection against market volatility – as with consumers, governments, and schools becoming increasingly reliant on the cloud, the need for data centers will only continue to grow in tandem.
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