On August 8, Equinix (EQIX) declared a regular quarterly cash dividend of $2.28 per share for the third quarter. The dividend is payable on September 19 to shareholders of record as of August 22. The newly declared dividend is 14% higher than the dividend of $2.00 per share that Equinix paid during the third quarter of 2017.
Equinix has been paying quarterly dividends consistently and increasing every year since its conversion to a REIT in January 2015. Equinix is expected to distribute $9.12 per share as dividends to its shareholders this year, which marks a compound annual growth rate of 10.5% since 2015.
Dividend payout ratio
Since its conversion into a REIT in 2015, Equinix has maintained its dividend payout ratio (dividend payment as a percentage of adjusted funds flow from operations or AFFO) of ~45%. With the steady growth in AFFO every year, the company’s dividend payout in dollar terms has increased. The data center operator’s annual cash dividend payout increased to $612 million in 2017 from $394 million in 2015.
In 2018, Equinix plans to distribute ~$725 million as dividends, which is 18% growth YoY. In the first half of 2018, Equinix allocated $368.8 million as dividends to its shareholders.
Dividend yield and stock price performance
At the current market prices, Equinix’s dividend yield is 2%, which is the lowest compared to its competitors in the data center REIT space. CyrusOne (CONE), CoreSite Realty (COR), and Digital Realty (DLR) have yields of 2.8%, 3.6%, and 3.3%, respectively.
Year-to-date, Equinix’s shares have underperformed most of its peers. The stock has lost 1.3% of its value in 2018, while CyrusOne, CoreSite Realty, and Digital Realty have recorded share price appreciation of 9.8%, 0.4%, and 6.7%, respectively.
Equinix and its peers account for ~5.6% of the Vanguard Real Estate ETF (VNQ).