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Why Iron Mountain Incorporated (NYSE:IRM)’s 6.71% Dividend Is Not A Good Reason To Buy

Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Iron Mountain Incorporated (NYSE:IRM) has returned to shareholders over the past 8 years, an average dividend yield of 5.00% annually. Should it have a place in your portfolio? Let’s take a look at Iron Mountain in more detail. View out our latest analysis for Iron Mountain

How I analyze a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

  • Is their annual yield among the top 25% of dividend payers?

  • Does it consistently pay out dividends without missing a payment of significantly cutting payout?

  • Has it increased its dividend per share amount over the past?

  • Is its earnings sufficient to payout dividend at the current rate?

  • Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

NYSE:IRM Historical Dividend Yield June 26th 18
NYSE:IRM Historical Dividend Yield June 26th 18

How does Iron Mountain fare?

Although REITs are expected to payout a high portion of the earnings, Iron Mountain currently pays out more than double its net income, which suggests that the dividend is not well-covered by earnings by any means. Furthermore, analysts are forecasting the payout ratio to remain at this high level going forward, leading to a future of uncertainty around the stability of IRM’s dividend income.

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Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. The reality is that it is too early to consider Iron Mountain as a dividend investment. It has only been consistently paying dividends for 8 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

In terms of its peers, Iron Mountain generates a yield of 6.71%, which is high for REITs stocks.

Next Steps:

After digging a little deeper into Iron Mountain’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three pertinent aspects you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for IRM’s future growth? Take a look at our free research report of analyst consensus for IRM’s outlook.

  2. Valuation: What is IRM worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether IRM is currently mispriced by the market.

  3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.