1 Future Dividend Aristocrat With Tons of Growth Potential

Datacenter owner and operator Digital Realty Trust (NYSE: DLR) has delivered excellent, market-beating returns since its 2004 IPO, and there's no reason to believe this will change. In this Fool Live video clip, recorded on Jan. 14, Fool.com contributors Matt Frankel and Jason Hall discuss why Digital Realty is still their favorite way to play the data center space.

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Matt Frankel: The data center space, the trends are in the right direction. We're 100% in agreement on that. The need for secure and reliable places to house data, servers, things like that, it's not going to go away anytime soon. It's exponentially growing over the years. You want to go first?

Jason Hall: Do it.

Frankel: I like Digital Realty Trust.

Hall: This one right?

Frankel: Yep. That one. I like it because as opposed to the other big leader in the space is Equinix (NASDAQ: EQIX). After a few recent acquisitions, there's only two publicly traded data center REITs, so my odds are 50-50 of being on the same page as Jason here. Digital Realty I prefer it to Equinix because one, they own most of their properties. Equinix leases about half of theirs.

Hall: Equinix is actually a big tenant of Digital Realty Trust.

Frankel: They are. A lot of the other data center operators are as well. Digital Realty Trust is aggressively expanding overseas, which is my favorite part of the business right now. They just announced that they are acquiring a majority interest in an Africa-based REIT company or data center company?

Hall: Teraco.

Frankel: Yeah. Teraco. Then they closed the joint venture in India with one of Jason's favorite companies.

Hall: Brookfield (NYSE: BIP).

Frankel: Both of those are massively untapped markets that will evolve for decades to come. I think there's a lot of potential for Digital Realty to be a 10-bagger in the next 20 years or so.

Hall: I think so. The stock is near an all-time high that's pushing the dividend yield way down. But I think you have to look forward. It is getting relatively mature in North America, Europe, some of those markets. But you think about India, there is still enormous potential there. As that country continues to modernize, more people become internet-enabled. When you think about the entire continent of Africa this is now a couple of dozen countries, but looking at it as one block, enormous untapped potential. The demographics are so good, the average African as I think still under 20. It's just enormous. You think about the potential there and I'm a big believer in a company like this to continue to do deals and partnerships and acquisitions and remain dominant.

Jason Hall owns Brookfield Infrastructure Partners and Digital Realty Trust. Matthew Frankel, CFP® owns Digital Realty Trust. The Motley Fool owns and recommends Digital Realty Trust and Equinix. The Motley Fool recommends Brookfield Infra Partners LP Units and Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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