Five Reasons to Add Digital Realty Stock to Your Portfolio Now

Digital Realty DLR is well-positioned for growth with decent leasing activity amid robust demand for data centers, a diverse tenant roster, accretive buyouts, development efforts and balance sheet strength.Last week, Digital Realty announced a collaboration with Dell Technologies and DXC, aimed at addressing enterprise AI challenges, enhancing deployment processes and speeding up outcomes.Analysts seem bullish on this Zacks Rank #2 (Buy) company. The Zacks Consensus Estimate for DLR’s 2025 AFFO per share has moved a cent northward over the past week to $7.21, with an expected rise of 7.5% from last year.Over the past three months, DLR’s shares have risen 2.8% against the industry’s decline of 1.2%. Image Source: Zacks Investment Research Factors That Make Digital Realty Stock a Solid PickBooming Data Center Market: With the growth in cloud computing, the Internet of Things and Big Data and an increasing number of companies opting for third-party IT infrastructure, data-center REITs are experiencing a booming market. Also, the estimated growth rates for the artificial intelligence (“AI”), autonomous vehicle and virtual/augmented reality markets will remain robust over the next five to six years.DLR has a global presence, with 308 data centers in more than 50 metros with decent occupancy. Demand is strong in top-tier data center markets, and despite enjoying high occupancy, these markets are absorbing new construction at a faster pace.In the second quarter of 2025, the company signed $135 million of new leases, of which $45 million fell into the greater than 1-megawatt category, $72.5 million of 0-1 megawatt leases and $17.3 million of interconnection bookings.Diverse Tenant Base: DLR has a high-quality, diversified customer base comprising tenants from cloud content, information technology, network, and other enterprise and financial industries. The company is poised for growth with more than 5,000 global customers. Its tenant roster includes names like IBM, Oracle, LinkedIn, Meta Platforms, Comcast and others.Expansionary Efforts: Digital Realty is expected to ride on its growth curve, backed by strategic investments in land, infrastructure and acquisitions. In the April-June 2025 period, Digital Realty acquired land parcels in three metros. The first one, acquired for $120 million, is a 100-acre parcel in the Atlanta metro area. The second land parcel, acquired for $11 million, is a 167-acre parcel in the Dallas metro area. Lastly, several land parcels were acquired for around $6 million as part of an assemblage in the Chicago metro area. Such expansionary efforts will augur revenue growth for the company.In the second quarter of 2025, Digital Realty received additional equity commitments for its U.S. Hyperscale Data Center Fund from several global Limited Partners.Strong Development Pipeline: DLR is making efforts to enhance its portfolio by carrying out various development and redevelopment activities. The company has a robust development pipeline, which seems encouraging. As of June 30, 2025, it had 9.8 million square feet of space under active development and 4.6 million square feet of space held for future development. For 2025, the company expects to incur capital expenditures for its development activities (net of partner contributions) in the range of $3-$3.5 billion.Balance Sheet Strength:  Digital Realty has a solid balance sheet with ample liquidity. The company exited the second quarter of 2025 with cash and cash equivalents of $3.55 billion, up from $2.32 billion reported in the prior quarter.Its debt maturity schedule is well-laddered, with a 2.7% weighted average coupon as of June 30, 2025. Its net debt-to-adjusted EBITDA was 5.1X, while its fixed charge coverage was 4.7X as of the end of the second quarter of 2025. In addition, Digital Realty’s credit ratings from Fitch, S&P and Moody provide it with favorable access to the debt market and lower borrowing costs.Other Stocks to ConsiderSome other top-ranked stocks from the broader REIT sector are Crown Castle CCI and OUTFRONT Media OUT, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for CCI’s 2025 FFO per share has moved 2 cents northward to $4.21 over the past two months.The Zacks Consensus Estimate for OUT’s 2025 FFO per share has moved a cent upward to $1.89 over the past two months.Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.Zacks' Research Chief Picks Stock Most Likely to "At Least Double"Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.See Our Top Stock to Double (Plus 4 Runners Up) >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Crown Castle Inc. (CCI): Free Stock Analysis Report Digital Realty Trust, Inc. (DLR): Free Stock Analysis Report OUTFRONT Media Inc. (OUT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks