Iron Mountain Inc: 5.3%-Yielder Trading at Record Levels; Raises Full-Year Guidance
Is Iron Mountain Stock’s High-Yield Dividend Set to Increase Again?
For some reason, Iron Mountain Inc (NYSE:IRM) gets dumped on by investors and financial writers. Maybe annoyed investors are shorting IRM stock and bearish analysts need a target to complain about.
But when it comes to Iron Mountain, everything actually points to ongoing growth.
The company continues to raise its dividends, it recently reported record financial results, and it increased the midpoint of its 2021 financial guidance
Moreover, its share price has been on fire. As of this writing, Iron Mountain stock is up by:
- 36% over the last six months
- 60% year-to-date
- 63% year-over-year
- 140% since bottoming in March 2020
Chart courtesy of StockCharts.com
Will IRM Stock’s Annual Dividend Increase for a Record 10 Years?
Despite the massive gains in Iron Mountain stock’s price, the company still pays an inflation-busting dividend of 5.3%, or $2.47 per share, on an annual basis. And it has raised its annual dividend for the last nine years. (Source: “Dividend History,” Iron Mountain Inc, last accessed April 17, 2021.)
But that could be in jeopardy. On August 5, the company’s board of directors declared a quarterly cash dividend of $0.6185 per share. The last time Iron Mountain raised its quarterly dividend was in the fourth quarter of 2019, when it went from $0.611 per share to the current $0.6185.
Despite leaving its quarterly dividend unchanged for eight quarters, the company’s annual payout has still increased, from $2.42 in 2018 to $2.45 in 2019 and $2.47 in 2020. On the one hand, IRM stock didn’t raise its dividend in 2020. On the other hand, it also didn’t cut or suspend its dividend.
Iron Mountain stock has a history of raising its quarterly dividend in the final quarter of the year. And the company has been reporting great financial results. As a result, chances are good that Iron Mountain Inc will increase its quarterly payout in the fourth quarter of 2021, allowing it to say it has raised its annual payout for a record 10 consecutive years.
About Iron Mountain Inc
Iron Mountain is the global leader for storage and information management services, and it stores a lot.
With more than 225,000 global customers in the legal, financial, health-care, insurance, life sciences, energy, business services, entertainment, and government sectors—and a real estate network of 93 million square feet across 1,450 facilities—Iron Mountain stores 710 million cubic square feet of hard-copy records. (Source: “Investor Presentation: Q3 2021,” Iron Mountain Inc, last accessed September 3, 2021.)
Its customers’ valued assets include critical business information, highly sensitive data, and cultural and historical artifacts.
Iron Mountain also provides secure offsite cloud storage. The company’s $2.0-billion+ global data-center portfolio consists of 15 locations on three continents, covering 3.5 million gross square feet.
Its customers include approximately 95% of Fortune 1,000 companies, and it has a 98% customer retention rate. This helps it continue to report strong financial results.
Better-Than-Expected Q2 Results
For the second quarter ended June 30, Iron Mountain announced that its total revenue increased by 14% year-over-year to $1.1 billion. Its storage rental revenue was up by six percent, at $718.0 million, while its service revenue increased by 32% to $401.0 million. (Source: “Iron Mountain Reports Second Quarter Results,” Iron Mountain Inc, August 5, 2021.)
The company’s net income in the second quarter was $276.5 million, or $0.95 per share, compared to a second-quarter 2020 net loss of $7.1 million, or $0.02 per share. Its second-quarter 2021 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were up by 12.8% year-over-year, at $405.6 million, or $0.38 per share.
Iron Mountain Inc’s funds from operations (FFO) increased by 19% year-over-year to $0.69. Its adjusted FFO slipped by 1.5% year-over-year to $246.0 million, or $0.85 per share. The company’s second-quarter AFFO included previously disclosed tax refunds. Excluding the benefit of the tax refunds, its AFFO in the second quarter would have increased by 8.3%.
Thanks to the stronger-than-expected financial results, Iron Mountain was able to increase its full-year guidance. The company now expects to report:
- Total revenue in the range of $4.4 billion to $4.5 billion, up from the previous range of $4.3 billion to $4.5 billion
- Adjusted EBITDA in the range of $1.60 billion to $1.63 billion, up from the previous range of $1.58 billion to $1.63 billion
- AFFO in the range of $970.0 million to $1.0 billion, up from the previous range of $955.0 million to $1.0 billion
- AFFO per share in the range of $3.33 to $3.45, up from the previous range of $3.28 to $3.45
The Lowdown on Iron Mountain Inc
Iron Mountain Inc has been proving the bears wrong for years.
Despite COVID-19 crippling the global economy in 2020, the company reported solid full-year results. The momentum has continued in 2021, with record Q2 results and the company raising its full-year guidance.
That should help juice the price of IRM stock and allow it to continue providing a growing, high-yield dividend.