Is Iron Mountain a Great Dividend Stock?
Investing in dividend stocks might seem easy -- pick a stock with juicy dividend yields, invest a truckload of cash in it, then sit back and enjoy enormous gains in the long run. But there's a lot more to income investing than that. Beyond strong yields, a great dividend payer also must show a commitment to increasing its payouts regularly, finance those dividend checks from free cash flow (with some money left over for investing in the business), and run a strong business that will be around for decades to come without skipping a beat on the dividend boosts.
At first glance, ultra-secure storage specialist Iron Mountain (NYSE: IRM) looks like the perfect dividend investment. Iron Mountain's dividend yield is a meaty 7.3%, near all-time highs for that crucial metric. The company has increased its annual payouts every year since the dividend policy was started. Operating as a real estate investment trust (REIT), the company is required to pay out at least 90% of its taxable income to shareholders in the form of dividends. So Iron Mountain simply cannot stop supporting its generous dividend policy, or it would lose the favorable tax treatment that comes with the REIT status.
These payouts make a real difference to shareholders' value, too. Iron Mountain's stock has delivered a 50% return over the last 10 years, but the stock tripled in value if you reinvested all the dividends along the way.
Source Fool.com
