Key Reasons to Add Digital Realty Stock to Your Portfolio Now

Digital Realty DLR is well-poised to gain from a global, connectivity-rich data center platform as AI, cloud and enterprise demand support leasing and a record backlog.

A solid tenant base assures stable revenues. Accretive buyouts and investments in land and infrastructure globally, and a robust development pipeline, bode well for long-term growth.

Analysts seem bullish about this Zacks Rank #2 (Buy) company, with the Zacks Consensus Estimate for its 2026 AFFO per share being raised 1.2% over the past month to $8.40.

Over the past six months, DLR shares have risen 4.4% compared with the industry’s growth of 2.1%.

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Factors That Make Digital Realty Stock a Solid Pick

Booming Data Center Market: Data center demand remains supported by AI adoption, cloud migration and enterprise outsourcing of IT infrastructure. In the second quarter of 2026, Digital Realty signed $307 million of total bookings at 100% share, or $208 million at its share, including a record $108 million from the 0-1 megawatt plus interconnection category.

The weighted-average lag between lease signing and contractual commencement was nine months, supporting near-term revenue conversion. Backlog reached a record $1.9 billion at 100% share, or $1.4 billion at Digital Realty’s share, at quarter-end. Reflecting these trends, management raised its 2026 Core FFO per share outlook, excluding net promote, to $8.15-$8.20.

Diverse Tenant Base: Digital Realty serves a diversified mix of cloud, content, IT, network and enterprise customers across its global platform.  Many customers deploy their infrastructure across multiple locations, strengthening recurring revenue visibility and supporting long-term customer relationships. The broad customer base and geographic diversification also help reduce dependence on any single tenant and enhance the stability of the company’s operating platform.

Expansionary Efforts: Digital Realty is expanding its future growth capacity through land purchases, data-center acquisitions and private-capital investments. Key moves include the $475 million Kansas City site with up to 2 GW of power, additional capacity in Atlanta, Marseille, Malaysia and Northern Virginia, plus planned investments in Teraco and Columbia Capital. These initiatives expand leasing inventory, strengthen PlatformDIGITAL, increase network density and improve access to third-party capital, supporting long-term growth across colocation, hyperscale and private-capital channels.

Strong Development Pipeline: Digital Realty is ramping development to meet rising hyperscale and AI demand while maintaining disciplined returns. As of June 30, 2026, it had about 1.4 GW under construction at an 11.5% expected stabilized yield, with pre-leasing rising from 54% to 63% after July hyperscale deals. For 2026, net development capex is expected at $4.25-$4.75 billion, with stabilized yields targeted above 10%.

Balance Sheet Strength: Digital Realty maintains balance-sheet flexibility through retained cash flow, public capital and private-capital vehicles. As of June 30, 2026, debt totaled about $18.6 billion, with net debt-to-adjusted EBITDA at 4.7x and fixed charge coverage at 5.2x. The company had roughly $1.9 billion of cash and $3.6 billion of revolving-credit capacity, while its debt was largely fixed-rate or hedged at an average rate near 3%.

Other Stocks to Consider

Some other top-ranked stocks from the broader REIT sector are Four Corners Property Trust FCPT and OUTFRONT Media OUT, each carrying a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for FCPT’s 2026 FFO per share is pegged at $1.86, which indicates year-over-year growth of 4.5%.

The consensus estimate for OUT’s 2026 FFO per share has moved 3.4% upward over the past month to $2.32.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

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