Digital Realty Trust 5-Year Investor Return 2021-2026: Was DLR Worth Holding?

— Warren Buffett

The investment philosophy practiced by Warren Buffett calls for investors to take a long-term horizon when making an investment, such as a five-year holding period (or even longer), and to reconsider making the investment in the first place if unable to envision holding the stock for at least five years. In that spirit, a five-year window provides a useful stress test for any equity story — particularly for income-oriented names where compounding of dividends is a key part of the thesis.

In this article, we examine how such a long-term strategy would have worked for investors in Digital Realty Trust Inc (NYSE: DLR) who bought in 2021 and held through to today. Digital Realty is one of the world’s largest publicly traded data center real estate investment trusts (REITs), providing colocation, interconnection, and cloud infrastructure solutions to enterprise customers and major cloud service providers. As demand for data storage, cloud computing, and artificial intelligence (AI) workloads has expanded, DLR has been a central vehicle for investors seeking to gain exposure to the secular growth of digital infrastructure while receiving a steady stream of dividends.

DLR 5-Year Return Details
Start date:	03/12/2021	$10,000 03/12/2021 $16,006 03/11/2026
End date:	03/11/2026
Start price/share:	$134.19
End price/share:	$180.59
Starting shares:	74.52
Ending shares:	88.64
Dividends reinvested/share:	$24.16
Total return:	60.08%
Average annual return:	9.87%
Starting investment:	$10,000.00
Ending investment:	$16,006.03

The above analysis shows that the five-year investment result worked out well, with an annualized rate of return of 9.87%. This would have turned a $10K investment made five years ago into $16,006.03 today (as of 03/11/2026), assuming dividends were fully reinvested. On a total-return basis, that is a gain of 60.08%, comfortably ahead of inflation over the period and broadly consistent with long-run equity market return expectations.

It is worth underscoring that these returns were earned through a period that was far from benign for REITs. Between 2021 and 2025, the U.S. Federal Reserve moved from a near-zero interest-rate policy to the fastest hiking cycle in decades, pushing yields materially higher across the curve. REITs, particularly those with meaningful leverage such as large data center owners, typically trade inversely with interest rates, as higher yields raise financing costs and compress the relative appeal of current dividend yields. DLR shares experienced substantial volatility during this time, including a meaningful drawdown in 2022 when the market repriced rate-sensitive assets. Long-term investors who adhered to a Buffett-style discipline and avoided reacting to short-term macro headlines, however, ultimately captured the recovery and subsequent compounding of both price and income.

Beyond share price change, another component of DLR’s total return these past five years has been the payment by Digital Realty Trust Inc of $24.16/share in dividends to shareholders. For data center REITs, dividends are funded primarily from funds from operations (FFO) and, in the case of Digital Realty, from adjusted FFO (AFFO), which exclude non-cash items such as depreciation of real estate. The company has historically targeted a payout ratio that balances current income with reinvestment into new development projects, including high-power data centers tailored to AI and cloud workloads.

Automatic reinvestment of dividends can be a powerful way to compound returns, especially for REITs with recurring cash flows. In the above calculations, we presume that dividends are reinvested into additional shares of stock via a dividend reinvestment plan (DRIP). That reinvestment is what drove the share count from 74.52 to 88.64 over the five-year period, even though no additional capital was contributed. Each quarterly dividend not only provided income but also bought incremental exposure to the company’s portfolio of more than 300 data centers across North America, Europe, Latin America, Africa, and the Asia-Pacific region. (For the purpose of these calculations, the closing price on the ex-dividend date is used.)

Based upon the most recent annualized dividend rate of 4.88/share, we calculate that DLR has a current yield of approximately 2.70%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4.88 against the original $134.19/share purchase price. This works out to a yield on cost of 2.01%.

Yield on cost provides a useful lens for long-term investors, but it should be interpreted cautiously. While a rising yield on cost over time can illustrate how dividend growth improves the effective income stream on the original capital outlay, the market will always value the shares based on the current yield relative to today’s price and interest rate environment. In DLR’s case, the current yield near 2.70% slots it somewhere between a pure growth-oriented technology stock and a traditional high-yield REIT, reflecting the company’s hybrid profile as both an owner of mission-critical infrastructure and a beneficiary of secular digitalization trends.

For context, over this same five-year period the total return profile of DLR would likely have lagged the more aggressive segments of the technology sector, particularly the largest cloud and AI platform providers, but outperformed many rate-sensitive equity REITs with slower fundamental growth. Investors in Digital Realty essentially traded some upside participation in the highest-growth technology names for a steadier stream of contractual rental income and a diversified global tenant base, which includes hyperscale cloud providers, financial institutions, and enterprise customers across a wide range of industries.

Looking ahead, the key drivers for DLR’s next five years will likely include:

• Ongoing global demand for data center capacity as enterprises continue to migrate workloads to the cloud.
• Incremental power and cooling requirements associated with AI workloads, which can support higher rents but also require significant capital investment.
• The trajectory of interest rates and credit spreads, which will influence both the cost of capital for new development and the valuation multiple investors are willing to pay.
• Competitive dynamics within the data center REIT universe, as peers pursue development pipelines and joint ventures to capture hyperscale demand.
• Digital Realty’s own balance sheet management, including leverage, unsecured versus secured debt mix, and its capacity to fund growth while maintaining its dividend policy.

For investors evaluating DLR today, the backward-looking analysis presented here is not a guarantee of future performance, but it does demonstrate that a disciplined, long-term, dividend-reinvestment strategy in a high-quality, mission-critical REIT could deliver solid, inflation-beating returns through a challenging macroeconomic backdrop.

One more investment quote to leave you with:
“Searching for companies is like looking for grubs under rocks: if you turn over 10 rocks you’ll likely find one grub; if you turn over 20 rocks you’ll find two.” — Peter Lynch