IBD's Dividend Leaders screen focuses on stocks that provide a high dividend with strong fundamentals. Today, we have Iron Mountain (IRM), which boasts an impressive yield and a stable business model.
XIron Mountain, based in Boston, is a global leader for storage and information management solutions. The company principally helps customers store both physical and digital data.
Iron Mountain's reach is vast. As of last year, the U.S. government and 94% of Fortune 1000 companies used Iron Mountain to store information.
An Impressive Dividend
Iron Mountain boasts a dividend yield of 5.2%, which ranks it among the top dividend payers in the U.S. This yield is an enviable four times higher than the 1.29% yield of the S&P 500.
Currently, Iron Mountain pays a dividend of 61.85 cents a quarter, or $2.47 a year. Iron Mountain has steadily increased its dividend over the past 10 years, with the exception of this year. The dividend remained unchanged from 2020.
Iron Mountain has been growing, albeit slowly. Three-year annualized EPS growth is 10%. This represents an EPS Rating of 74, not exactly enviable. Nevertheless, blockbuster earnings are not necessarily a prerequisite for an income-based investment.
By looking at earnings stability we can get a better idea of potential risks to Iron Mountain's dividend.
On IBD's Earnings Stability Factor, which measures how stable a company's earnings are over a five-year period, Iron Mountain scores a 9 on a scale from 0 (most stable) to 99 (least stable).
Best Dividend Stocks: Iron Mountain's Steady Business
In fact, since 2015 Iron Mountain has not had a greater than 5.2% surprise on EPS numbers. Analysts know what to expect, which makes sense considering the noncyclical nature of Iron Mountain's data storage business.
Per Iron Mountain's 10-K form: "A significant amount of activity generated in the information management industry is the result of legislative requirements. To varying degrees across the world, organizations are required by law to create certain records and to retain them for a specified period of time."
With demand for Iron Mountain's services constant and required by law, there is minimal risk to Iron Mountains earnings, and therefore its dividend.
Holding up very well during recent market volatility, Iron Mountain stock is forming a cup-with-handle pattern. It has a 49.50 buy point, according to MarketSmith.
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