The theme for the past few days has been counterintuitive stocks – and we’re going to continue that for the final trading day of the week.
Note: Because markets are closed on Monday for Juneteenth, this newsletter will resume on Tuesday, where I’ll highlight 3 fast-moving stocks to keep an eye on for the week.
Today’s stock is a major dividend player that operates in the real estate industry and will ALSO receive a nice boost from the generative AI trend.
In fact, I believe that this stock is one of the best ways to convert the huge tailwinds we’re seeing around AI into steady and consistent cash flow that goes directly into your bank account…
Because this company is mandated by law to pay you a dividend as long as it has the cash flow to do so…
And with the AI tailwind sending its cash flow surging, this is a great choice for income-focused investors also looking to benefit from the AI megatrend.
Equinix, Inc. (EQIX)
Equinix is a REIT (real estate investment trust) that owns and operates data centers – the out-of-sight hardware that makes the digital space possible.
As a REIT, Equinix is mandated to distribute at least 90% of its taxable income to its investors.
For Equinix, that means it has to distribute at least 90% of its $700+ million in net income it earned in FY2022 – an amount that is only set to increase thanks to AI.
In its most recent quarterly earnings conference, Equinix’s CEO revealed that it had already closed several “key AI wins” and was seeing a growing pipeline of new opportunities.
And those wins are already being reflected in the latest quarterly numbers, with the company’s adjusted EBITDA hitting almost $950 million from $840 million in the previous quarter and $800 million a year ago.
You should know that compared to other REITs, Equinix’s dividend yield is modest – currently standing at about 1.8%.
But remember, the company must pay out these dividends – making it a great way to enjoy some passive income from the AI megatrend.
Plus, there’s also the capital appreciation angle. The company is up nearly 15% this year and is only about 15% away from its previous all-time highs. Considering that the AI boom is just getting started, investors could still see significant appreciation in Equinix’s underlying stock.
To your wealth,
Felix @ Ace of Investing