Let’s figure out this teaser pitch courtesy o The Wealth Advisory
The ad begins with a sweeping aerial shot of a sprawling facility, accompanied by text that states…
He presents a chart to back up his assertion that this so-called “AI Tollbooth” company is experiencing rapid revenue growth. The data indicates that in 2022, the company generated around $4.5 to $5 billion total earnings, a significant rise from roughly $3 billion back in 2018. Moreover, another hint is provided:
That statement is somewhat misleading but still provides a valuable clue. When an advertisement claims that a company “required to distribute 90% of earnings with you,” it almost always points to a property Investment Trust. These entities benefit from tax advantages, primarily holding real estate assets while bypassing corporate taxes by distributing at least 90% of their earnings subject to tax as dividends to investors. In reality, the government still collects taxes on these payouts through shareholders’ payout earnings. This requirement is completely unrelated to any so-called “AI monopoly recognition” but stems from a tax policy established during President Eisenhower’s era. The goal was to make property investment more accessible to a wider audience. Although REIT regulations have evolved throughout the years, the notion that these companies distribute profits due to their dominance is simply a misreading of the tax code.
Regarding the expansion of the “gateway” dividends chart, it illustrates an increase from approximately $1 back in 2018 to approximately $1.25 in 2023, equating to an annual growth rate of around 6%. Although this dividend expansion has exceeded inflation—a reassuring indicator—it isn’t especially impressive in a market environment fueled by AI-driven enthusiasm and high-growth narratives.
Additionally, some individuals may appear to be ordinary people, yet they are actually collecting substantial amounts of money. Here’s a brief excerpt from that part…
We’ll revisit that shortly, but first, let’s take a look at the other hints he provides…
You’ve likely already figured out that the investment being discussed is a REIT. Furthermore, the so-called “AI Tollbooths” the speaker refers to appear to be data centers—massive facilities that supply power and network infrastructure to support numerous high-capacity servers. Eventually, the speaker delves into more specifics on this topic.
In the last ten years, The count of dedicated real estate investment trusts specializing in data centers has declined significantly due to smaller firms being acquired by larger entities. As a result, the list of potential candidates is relatively short, with Digital Realty being one of the most recognizable names in the sector. To confirm this, one could compare its current dividend payouts and revenue to the provided charts or analyze the total quantity of data center assets it owns.
Despite facing challenges throughout the last decade, digital Realty Trust has recently made significant progress. The company has strengthened its cash flow, lowered leverage, in part by partnering with institutional investment firms on various initiatives. As an asset class, data centers remain highly attractive since they rent lease server capacity for a wide variety of clients while transferring expenses for electricity and network access—allowing them to steer clear of the risks associated with extended, unprofitable lease agreements. However, like all real estate investments, they are still susceptible to risks such as overdevelopment and rising interest rates, which can drive up debt servicing costs. These concerns were particularly relevant through from mid-2022 through 2023, but the AI-driven surge in need for server facility infrastructure capacity—driven by the rapid deployment of NVIDIA-powered infrastructure and competition in generative AI, including models like ChatGPT—has significantly shifted the landscape.
Major tech companies rely on data centers to store and process vast amounts of information. Digital Realty operates these facilities and offers interconnection services to a range of clients, including industry giants such as Alphabet, Meta, and Microsoft. However, it would be an overstatement to suggest that any among these companies are entirely heavily tied to Digital Realty, as they are also heavily investing in and developing their own large-scale data centers. Since there is no uniform dimensions for these facilities, companies often build customized infrastructure to meet their needs.
Digital Realty have proven to be a strong investment over an extended period. The chart below illustrates the overall yield, factoring in dividends, DLR in comparison to the S&P500 and its key rival, Equinix over the last ten years.
This company operates as a REIT, primarily attracting investors who prioritize steady dividend income alongside moderate dividend growth. During the last12 months, shareholders received a total of $4.88 for each stock unit in dividends, equating to a trailing yield slightly above 3% based on a share price of $145. However, there hasn’t been a dividend increase since 2022, likely due to a strategic focus on debt reduction and navigating higher borrowing expenses. Similar to many property trusts, it maintained a pattern of consistent dividend hikes during periods of favorable borrowing costs, and it’s reasonable to anticipate a return to that trend once conditions are more favorable.
For those wondering how to generate an annual dividend income of $48,000, the numbers tell a more complex story. The Wealth Advisory frequently presents substantial income figures without clarifying the capital required to achieve them. In the case of DLR, an investor would need to hold approximately ten thousand stock units to reach that payout level. Given the stock’s current price of $145, this translates to a required investment of roughly $1,450,000. Of course, this assumes the company sustains its existing dividend payments, making dividend reliability a critical consideration.
To retain its REIT status, Digital Realty—like all real estate investment trusts—is required to distribute at least 90% of taxable income as dividends. However, this mandate offers limited protection if business conditions deteriorate. In 2023, for instance, the company likely needed to pay out only around $2.75 per share to meet the legal requirement. Many REITs, however, distribute well beyond this threshold due to the impact of accounting depreciation expenses, which significantly reduce their tax-obligated earnings. Instead of allocating these depreciation savings toward maintenance, asset replacements, or expansion, REITs typically rely on debt financing and issuing new shares to fund their operations, allowing them to return more cash to shareholders.
A clear example of this can be seen in Digital Realty’s financials from last year. The company reported $950,000,000 in earnings but recorded $1,700,000,000 written off for asset value reduction. After factoring in additional write-offs and adjustments, it generated $1,640,000,000 billion generated through core business activities, from which $1,520,000,000 billion was allocated to dividend payments. To support its growth initiatives, Digital Realty raised $334,000,000 through new debt—lower than its usual borrowing levels—and brought in an additional $2,200,000,000 via share issuances.
Another important aspect to consider is the so-called “regular people” highlighted in the promotional materials. Take Corey Dyer, for example—he reportedly received a payout of $39,645. However, Dyer was actually the head of revenue at Digital Realty before being let go last summer. During his tenure, he regularly sold shares, though at one point, his holdings neared 10,000 shares, which would have yielded an annual dividend close to the reported amount.
Similarly, the mention of “Jeannie L., a former paralegal from Texas who received $53,588” appears to reference Jeannie Lee. While she did work as a paralegal in 2000, she later earned a law degree graduating from University of Michigan and built a successful career as a corporate attorney. She has been with Digital Realty over roughly a decade and currently serves as EVP and Chief Legal Officer. Public records indicate she owned 10,769 stock units, despite regularly selling portions of her holdings. Based on that, her dividend income would amount to approximately $53,000 annually—though this figure is likely far lower than her executive compensation, which isn’t disclosed since she’s not among the company’s highest-paid executives. Her combined holdings of stocks, options are estimated to be worth around $5,500,000.
Then there’s “Arthur W., a retired attorney from New York…”—likely referring to Arthur W. Stein, Digital Realty’s former CEO, who was dismissed toward the end of 2022.
Another example… “David R., aged 73″ The individual said to have received an $854,000 payout is very likely David Ruberg, the former executive who served as an Executive Vice President with Digital Realty up to mid-2022. Unfortunately, he passed away in November of that year. During his time at the company, Ruberg held over two hundred thousand shares, which would have generated substantial dividend income.
At major corporations valued worth $40 billion, stock grants are a common part of executive compensation. Those who hold onto their shares long-term can accumulate significant dividend earnings. For outside investors, purchasing shares in a REIT presents an opportunity to build a steady income stream. Historically, REITs have often outperformed the broader stock market in total returns, but investors should remain mindful of share price volatility. The future success of REITs such as Digital Realty will largely depend on the sustained expansion of data center demand and the direction of interest rates in the coming years.
Meanwhile, Williams promotes several “Special Reports” on income strategies, including investing in real estate and capitalizing on Amazon’s record-breaking sales. One such report focuses specifically on REITs that hold retail properties.
