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Equinix Inc

Equinix Inc. (NASDAQ:EQIX) may sound like a high flying tech company, and while it deals with the very important sub sector of data centers, it is far from a high growth stock. In fact, it may be considered the opposite: it’s a REIT. If you don’t know what a REIT is, you are definitely missing out on a solid way of diversifying your portfolio. REIT stands for Real Estate Investment Trust, and is a way for investors to put their money into real estate holdings. REITs are not volatile and are a much cheaper way to play the real estate market without actually buying real estate. Learn More

Equinix is one of the largest REITs by market cap and commands a steep valuation for its stock price. It is currently trading around $710 per share at the time of this writing, and has a market cap of just over $63 billion USD. Aside from stability, what is the best thing about REITs? The dividend! REITs legally need to pay out a certain amount of revenues as dividends so many of them actually pay very high yields and often pay dividends out on a monthly basis! Let’s take a look at how Equinix will hold up as a long-term investment.

The Bullish Case: Anyone invested in the stock market right now should know the value of having stable equities in your portfolio. Equinix provided just that and although the REIT industry took a larger than normal hit during COVID-19, the recovery was swift and Equinix is positioned well to be a bedrock stock moving forward. Equinix has holdings of more than 200 data centers throughout 25 different countries across five continents, so it is not tied to the specific economy of any one region. Data centers are one of the fastest growing streams of the big tech industry and as we move towards a world with 5G, autonomous vehicles, machine learning, and the Internet of Things, we are going to require larger places to store all of the data. As traditional real estate and retail REITs wane in popularity, big data is in the first inning of the game so suffice to say, Equinix’s holdings will be relevant for years to come. Equinix pays a 1.62% dividend yield which equates to roughly $11.48 per share annually.
The Bearish Case: The one thing investors will look at is how high of a valuation the stock has. At $710 per share, there may be other REIT stocks that pay a higher dividend yield for a much cheaper valuation. It’s difficult to find too many faults in a REIT, although one thing to note is that Equinix pays its dividend quarterly rather than monthly like other REITs. If you’re an investor who wants rapid growth, Equinix is probably not for you. The stock has only returned 5.57% to investors over the past 52-weeks compared to a 48.25% return from the benchmark S&P 500 index.

Final Verdict on Equinix : Equinix is a REIT play on data centers around the world and is at the crossroads of big data and the global transition of enterprise to the cloud. As of 2021, Equinix owns 106 of the 227 data centers it manages 86% of the leased ones are renewed through at least 2035. Management raised the dividend once again last quarter, something investors will love to hear that Equinix is dedicated to moving forward. If you can afford to, Equinix makes for a steady income producer in your portfolio.

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