This Unloved Dividend Stock Is Secretly Powering the AI Revolution
Key Points
Digital Realty is one of the world’s largest data center REITs.
It will profit from the AI boom and return most of that cash to its investors.
- 10 stocks we like better than Digital Realty Trust ›
Artificial intelligence (AI) stocks are often associated with aggressive growth rather than stable dividends. But today, we'll take a look at an underappreciated stock that quietly powers the AI revolution while paying steady dividends: Digital Realty (NYSE: DLR).
What does Digital Realty do?
Digital Realty is one of the largest data center real estate investment trusts (REITs). It buys up data centers, leases out that space, and is required to distribute at least 90% of its taxable income as dividends to maintain a lower tax rate. It operates more than 300 data centers worldwide, and its customers include over half of the Fortune 500 companies.
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From 2020 to 2025, its core funds from operations (FFO) per share -- a key profitability metric for REITs -- rose from $6.22 to $7.29. It expects that figure to rise to $8.15-$8.20 per share in 2026 and easily cover its forward dividend rate of $4.88. That equals a forward yield of 2.6%.
Digital Realty has kept its occupancy rate in the mid-80s over the past five years, even as it gradually divested its older "non-core" data centers -- which have less growth potential than its hyperscale data centers. Therefore, if you're looking for a dividend stock that will benefit from the rapid growth of the cloud and AI markets, Digital Reality checks all the right boxes.
Should you buy stock in Digital Realty Trust right now?
Before you buy stock in Digital Realty Trust, consider this:
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool recommends Digital Realty Trust. The Motley Fool has a disclosure policy.
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