Iron Mountain (IRM) is back in the spotlight after posting strong earnings that show impressive growth. It’s also a top play in dividend stocks, allowing risk-averse investors to enjoy the best of both worlds.
Headquartered in Boston, Mass., Iron Mountain provides digital and physical storage services to the U.S. government and more than 95% of Fortune 1000 companies.
This market leader has been a regular feature in Income Investor. It boasts a vast client list closely affiliated with the company through long-term storage contracts, which are often legislatively required.
Iron Mountain also pays a 4.5% annual dividend yield, well above the S&P 500’s 1.4% average. The company’s next quarterly dividend of 61.85 cents per share will be paid on Oct. 4 to shareholders who owned the stock on Sept. 13.
Record Second Quarter Earnings, Guidance Reaffirmed
Iron Mountain reported record second-quarter results on Aug. 4, posting a profit of 92 cents per share on $1.29 billion in revenue. The earnings beat estimates by 21 cents per share while marking a 15.2% revenue increase year over year. This is an excellent report for a dividend stock.
The company reaffirmed 2022 guidance, expecting between 14% and 17% revenue growth and 6% to 10% earnings growth.
While Iron Mountain offers a strong dividend investment opportunity, there are some concerns.
Long-term debt is sizable at $9.9 billion, up from $8.9 billion a year prior. This increased debt has been useful, helping the company transition to digital storage through the acquisition of ITRenew earlier this year.
Nevertheless, creditors are not fully convinced, as illustrated by the BB- debt rating from S&P Global. A high debt burden may hamper growth as interest rates rise. In addition, the majority of profits are still derived from physical storage, which is expected to decline in coming years.
Best Dividend Stocks: Iron Mountain Bullish Outlook
Iron Mountain is the top-rated stock in IBD’s Commercial Document Management Group, with a 91 Composite Rating. The relative strength line has surged since last week’s earnings report, lifting the Relative Strength Rating to a bullish 91.
IRM shares have now lifted above both its 50- and 200-day moving averages as the stock forms a base with a 58.71 buy point.
Dividend stocks with excellent technical patterns can often outperform growth stocks.
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