Chart of the Week: Keppel DC REIT Keeps Up Dividend Run

Data centre stocks

Author: Tim Phillips

April 23, 2021

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It’s earnings season again. And this week in Singapore there were a slew of quarterly numbers coming from some of the big hitters in the real estate investment trust (REIT) space.

One investor favourite, Keppel DC REIT (SGX: AJBU) released its first-quarter 2021 earnings. The data centre operator has had a fantastic run as the demand for data, and the space to store it, soared in 2020.

Last year, Keppel DC’s share price gained by about 35% in a year when Singapore’s Straits Times Index ended the year in negative territory.

Its share price got a further boost as the REIT was included in the Straits Times Index towards the end of last year.

Dividends galore

Keppel DC REIT has been buying up new data centre properties in Europe, adding to its sizeable portfolio in 2020.

The company now has 19 data centre properties across eight countries and remains the only pure-play data centre REIT listed in Asia.

It has also allowed Keppel DC REIT to keep raising its distribution per unit (DPU), or in other words, its dividend.

Its latest first-quarter earnings saw net property income up 10% year-on-year to S$61 million while distributable income rose 17.5% year-on-year to S$42 million.

Meanwhile, the key metric all shareholder should be looking at, the DPU, soared 18.1% year-on-year to 2.462 Singapore cents (see below).

That’s good news for investors as the REIT looks well-positioned to keep growing. However, there are a few caveats.

Keppel DC REIT’s share price has traded sideways since August of last year while, more recently, it has fallen 10% since February of this year.

With a relatively low dividend yield of 3%, investors who are interested in this data centre REIT should remember they’re in it for the long haul.

Keppel DC dividend

Source: Keppel DC REIT Q1 2021 earnings presentation

Disclaimer: ProsperUs Head of Content Tim Phillips doesn’t own shares of any companies mentioned.

About the Author: Tim Phillips

Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth. He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. In his spare time, Tim enjoys running after his two year-old son, playing football and practicing yoga.