Update - August 15, 2023

A Hard Asset Income Play Like No Other

One man’s trash is another man’s treasure…

And another man’s treasure – if it’s valuable enough – needs to be stored somewhere.

That’s where Iron Mountain (IRM), the $16 billion high-yielding real estate juggernaut that we added to our portfolio in May, comes in.

It’s a real estate investment trust (REIT)… but it doesn’t own apartment buildings, malls or hospitals. It specializes in storage vaults and counts among its clients 94% of Fortune 1000 companies… plus the rich and famous.

Today, the company has over 1,500 locations, some underground and some – mostly data centers – aboveground. They’re spread around the globe. The firm also offers digital security products and cloud-based storage.

Iron Mountain recently opened its books for the second quarter… and did not disappoint.

The company reported $1.36 billion in revenue for the quarter ended June 2023. It was a year-over-year increase of 5.3%… and an all-time high. Earnings per share came in at $0.94 for the period, up from $0.46 a year ago.

Very nice.

Our shares have treated us well. We’re up 10% since getting in. The stock also hit an all-time high in late July.

It’s proof that we don’t own a stake in some ho-hum piece of real estate. We own a stake in some unique real estate that is mostly situated just outside some of the world’s most populous cities.

And we also own a unique revenue stream that is reliable and growing. Bill Gates, after all, isn’t simply going to take his photos and go home. Sony Music isn’t going to take the million-plus original recordings it has stored with Iron Mountain and put them in a safe in the basement.

No, they’re going to keep renting their spaces month after month, year after year. And while they’re busy not taking their stuff out… others are busy putting fresh treasures in.

In other words, this isn’t a typical REIT whose value depends on fluctuating real estate prices. And the annual yield it pays shareholders doesn’t hinge on up-and-down occupancy rates or rental values. No. This is a much different type of REIT.

And yet… it’s still a REIT, which means it must pay out 90% or more of its taxable profits to shareholders each year.

That’s what makes this a reliable, high-yielding play. It pays a solid 4.3% annually… and management just hiked the dividend 5%. It will pay out a quarterly cash dividend of $0.65 per share for the third quarter on October 5 (to shareholders of record on September 15).

And as we’ve seen, it offers strong share price appreciation potential. The company continues to expand and acquire competitors and complementary assets.

This is an ideal stock to own in the current environment. It remains a “Buy.”

It’s almost entirely insulated from economic conditions. It has stored Charles Darwin’s final documents through booms and busts… and that’s not likely to change.

As long as treasures need to be protected and companies have data to store, this unique REIT will continue to do good business.