Everyone's Chasing AI Data Center Stocks. This 5%-Yielding Dividend Stock Already Owns a Piece of the Boom.

Realty Income recently formed a $6 billion joint venture to invest in data centers.

Data center investments should support its continued dividend growth.

AI data centers are the hot investment theme today. From data center developers to chipmakers to power producers, it seems like everyone is chasing the AI data center investment trend. That's pushing up valuations, pulling future upside forward.

However, while everyone is bidding up almost anything related to AI data centers, they're overlooking a boring way to cash in on the megatrend. Realty Income (NYSE: O) already owns a piece of the data center boom. That positions the real estate investment trust ( REIT ) to continue to steadily grow its more than 5%-yielding monthly dividend .

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Realty Income started investing in data centers in late 2023 by forming a build-to-suit joint venture (JV) with Digital Realty . It bought an 80% stake in a JV building up to 48 megawatts of data center capacity, secured by a long-term net lease with a large, high-quality company. The total build-out cost is up to $800 million.

The REIT recently inked an even bigger JV with Cloud Capital to invest in hyperscale data centers. The programmatic joint venture will initially hold over $6 billion in assets, with Realty Income expecting to invest up to $1.4 billion for a 45% stake in a three-asset Northern Virginia portfolio. The JV will provide it with the opportunity to invest in future qualifying data center developments and acquisitions in the U.S. and Europe.

These JV's position Realty Income to capitalize on the more than $1 trillion opportunity it sees for investing in global data centers. That's a massive opportunity for the $89 billion REIT (by enterprise value).