Dividend stock investing is an important part of financial planning for people nearing or in retirement. Careful dividend planning can provide a consistent and steady income for paying bills, traveling, assisting with the education of grandchildren or just having fun. But buying solid dividend companies is not always easy.
One way to measure the performance of a company is to look at its five-year dividend history. Five years of substantial dividend growth indicates a company has performed well through good and bad economic cycles and provides an inkling into its present earnings and forward potential.
Take a look at one real estate investment trust (REIT) with an impressive five-year dividend growth performance, and see how much a $10,000 investment in May 2018 would be generating in dividends today.
Equinix Inc. EQIX is a Redwood City, California-based specialized data center REIT that owns and operates a network of over 240 data centers across 71 major metropolitan areas, providing critical infrastructure to over 10,000 customers and 260 Fortune 500 companies around the world. Equinix was founded in 1998, and 25 years later it provides over 428,000 data interconnections worldwide. Its initial public offering (IPO) was in August 2000.
If you invested $10,000 in Equinix five years ago, you would have purchased 26.1 shares at $383.19 per share. The quarterly dividend then was $2.28 per share.
Over the past five years, Equinix has raised its quarterly dividend five times and presently pays $3.41 per share, a 49.5% increase. There have been no cuts nor suspensions of the dividend during that time.
Your $10,000 investment from five years ago would now be worth $20,308. The original $383.19 share price has risen 88.8% to a recent closing price of $723.58. You would have collected $54.61 per share in dividends for a total return of 103.08%. Its five-year annualized return of 15.46% is the ninth best among all REITs.
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If you invested $10,000 in Equinix five years ago but chose to reinvest dividends instead of collecting them, your original 26.1 shares would have grown to 28.56 shares and would now be worth $20,672, for a total return of 106.69%.
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Equinix has performed well and continues to produce solid dividend and share price growth. On May 3, Equinix announced excellent first-quarter operating results. Funds from operations (FFO) of $8.59 increased 21% over FFO of $7.16 in the first quarter of 2022. Revenue of $2 billion beat the analyst consensus estimate of $1.98 billion and was 15.22% above revenue of $1.73 billion in the first quarter of 2022. Equinix also raised its full-year 2023 revenue guidance to $8.175- $8.275 billion, an increase of 13% to 14% over guidance in 2022 and slightly ahead of the consensus estimate of $8.2 billion.
Analysts continue to favor Equinix. Following Equinix’s first-quarter report, Credit Suisse analyst Sami Badri maintained a Neutral position on Equinix and raised the price target from $753 to $768. Stifel analyst Erik Rasmussen maintained a Buy on Equinix and raised his price target from $820 to $835. Citigroup analyst Michael Rollins maintained a Buy rating on Equinix and raised his price target from $825 to $830.
Equinix has a total return of 9.81% year to date.
Over the past five years, private market real estate investments have outperformed the publicly traded REIT market by about 50%. Check out Benzinga’s Real Estate Offering Screener to discover the latest passive real estate investments.
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