Summary
- Iron Mountain delivered robust storage revenue growth despite the ongoing headwinds.
- The dividend remains covered under current expected AFFOs. The stock offers an attractive medium-term return potential, even under further deceleration in its underlying financials.
- Some risks remain, especially in terms of future financing.
- We believe that Iron Mountain is one of the few 7%+ yield stocks, showing sustainable distributions.
While the U.S. indices have been hitting all-time highs over the past weeks, we have been focusing on attractive income opportunities to extract more tangible and predictable returns. A few days ago, for example, we covered AvalonBay Communities (AVB), explaining how investors could still achieve double-digit returns by buying at an attractive valuation.
We view several, attractively priced, income opportunities, particularly in the real estate sector. One of these is Iron Mountain (IRM). The storage and information management services company recently announced its Q2 2020 results, demonstrating once again its financial resilience. We believe that the stock currently presents one of the most attractive income-producing picks in the market.
The stock offers a tremendous income opportunity, currently yielding a massive 8.4%, while also having the potential for capital appreciation. It overall makes for a unique total return opportunity, as this article attempts to explore.
Image source: Investor presentation
In this article, we will:
- Go over the company's latest quarterly results
- Assess the stock's income-producing qualities and explore its potential medium-term returns
- Highlight some potential risks
- Conclude why the stock remains a great pick for income-oriented investors.
Q2 results
On August 6th, the company reported its Q2-2020 results. Despite the challenges faced under these unprecedented times caused by COVID-19, the company managed to deliver robust financial metrics.
