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Iron Mountain: Buy This Blue Chip Stock To Boost Your Passive Income

Apr. 09, 2023 12:44 AM ETIron Mountain Incorporated (IRM)16 Comments
Kody's Dividends profile picture
Kody's Dividends


  • Iron Mountain's dividend payout ratio should fall from the mid-60% range in 2022 to the low-60% range in 2023.
  • The REIT's total revenue and AFFO per share soared higher in 2022.
  • My assumptions into the discounted cash flows model and dividend discount model demonstrate the stock to be 6% undervalued.
  • Iron Mountain's stock could deliver double-digit annual total returns with its 4.7% dividend yield and mid-single-digit annual AFFO per share growth potential.

Young couple backpack up a mountain summit

Young couple backpack up a mountain summit.


Building a successful dividend stock portfolio is no different than two people climbing a mountain. Little by little, step by step, you and your partner reach the mountain summit: It simply doesn't happen overnight.

This article was written by

Kody's Dividends profile picture
Hi, my name is Kody. I run Kody's Dividends. As you might guess, this is a blog primarily documenting my journey towards financial independence using dividend growth investing as the means to transform the dream of financial independence into a reality.I am forever indebted to this community because it helped me transition from simply being an investor to being an analyst for The Motley Fool back in June 2021 under my real name of Kody Kester. As a display of my gratitude, I will still be writing one article a month for SA starting in July 2022.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of IRM either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (16)

Long IRM, but not adding since they froze their dividend. I have been selling covered calls on my position to boost income.
Kody's Dividends profile picture
@Bruce-the-Moose That's a nice way to turbocharge your income.
Thanks for sharing.
Lovestocruise profile picture
Have held this for several years. Got in at $27 and have enjoyed the share price appreciation, and more importantly, the dividend income. See no reason to close out this position, but am not adding at this time.
Kody's Dividends profile picture
@Lovestocruise Thanks for the comment. Out of curiosity, is your position full? Or would you be a buyer at a specific price point?
Lovestocruise profile picture
@Kody's Dividends it is a normal full position for me but I would consider adding if the share price dropped 10% or so with no underlying fundamental change in the business.
Thanks for the article. Arguably optimistic re: 5% annual dividend growth going forward given data center investment required and inability to grow it over recent years. Also, not quite accurate re: 65% payout ratio of AFFO (AFFO: $790 mil, Div/preferred: $725 mil); it’s covered, but just barely, by that measure. Going forward, suspect profitability of data center growth will be critical.

Todd Atwood
Kody's Dividends profile picture
@atwood.todd My pleasure. But I can't seem to find from where you're getting your AFFO figure. I get $1,110 million from the Q4 earnings press release, which supports my 65% payout ratio. Appreciate your feedback.
@Kody's Dividends Hey Kody, see the AFFO line on SA’s financial statement (albeit AFFO not a GAAP # and can be loosey goosey per company). I’d also monitor the cash flow statement re: basic free cash flow related numbers (albeit this a REIT). The recent years acquisition expenditures (presumably data center related) + capex + dividend expenditures, are not quite covered by net income + depreciation/amortization. Hence the incremental debt. Perhaps acquisition phase behind it…although it’s been a consistent & sizable expenditure. We’ll see. I like the company and have been a shareholder for years, but cash flow has been a bit tight in this new business phase (and the data center sector has witnessed significant margin compression in recent yrs … see DLR & Equinix). Anyway, I appreciate your article.
Too much debt, hence too little growth especially in capital intensive data center development. The lack of dividend growth is a major issue. I've skimmed considerable profit in the last several months and will continue to do so in the mid $50's and above.
Kody's Dividends profile picture
@RayRay1000 Fair enough. IRM isn't necessarily a beacon of financial strength. But its year-end leverage ratio of 5.1 is the best it has been since 2017. Thanks for sharing.
birder profile picture
I have a moderately large position in IRM. It has performed well for me.
Kody's Dividends profile picture
@birder Same here. IRM has been a solid performer in the nearly 5 years that I have owned it. Thanks for commenting.
Thank you kody. Excellent write up. I see IRM trucks occasionally where I live. Paper storage isnt going away soon.
Kody's Dividends profile picture
@boog3 My pleasure and I do as well. Thanks for the comment.
Pretty stable company…believe they’ve consistently paid their dividend since the mid 1960s. A good company to have in your dividend portion of your portfolio…
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