Digital Realty (DLR) is a global data-center real estate investment trust, and it is the second name inside Marc Lichtenfeld’s “SpaceX Royalty” pitch. Alongside the larger Equinix, Digital Realty is sold as a way to collect “royalty” income from the suppliers that keep SpaceX’s internet service running. The company is real and well established, but as with the rest of this promo, the framing does more work than the underlying securities do.

What Digital Realty Does

Digital Realty builds, owns, and leases data centers across the world’s major markets, and it is one of the largest landlords in the sector. Its customers are cloud providers, enterprises, and network operators that rent space and power inside its facilities. As a REIT, Digital Realty is required to distribute at least 90 percent of its taxable income to shareholders each year, which is the tax structure behind the “royalty” language the promo uses.

The numbers give a sense of scale. At the October 27 close of about $179.01, Digital Realty carried a market capitalization around $66.41 billion. Its dividend yield sits in the low single digits, roughly 2 to 3 percent, which makes it a conventional income stock rather than anything resembling a royalty stream.

The SpaceX Connection Is Indirect

The pitch argues that Starlink traffic has to pass through physical data centers before it reaches a phone, so the landlords of those buildings are effectively collecting rent on SpaceX’s network. There is a grain of truth buried in that: some internet traffic is Starlink traffic, and some of that traffic moves through third-party facilities. But SpaceX is not a disclosed, direct tenant of Digital Realty, and the company’s earnings are not meaningfully driven by any single satellite network.

What actually moves Digital Realty is the same thing that moves every data-center REIT: cloud adoption, enterprise connectivity, and the buildout of AI infrastructure. We walk through that colocation business model in our data center colocation piece.

The Income Math

The headline promise of up to $11,400 a year deserves the same hard look here as it does for the other pick. At a 2.5 percent yield, collecting $11,400 a year requires about $456,000 invested. That is the size of the stake doing the work, not a legal loophole, and it is a detail the promo buries in the fine print. A $10,000 position at the same yield produces roughly $250 a year.

That is not a knock on Digital Realty. It is simply the reality that a dividend, even a reliable one, scales with the amount you put in. The larger sibling in this promo is Equinix, the biggest data-center REIT in the world, which we cover in our Equinix stock piece. For the full teardown of the pitch, see our SpaceX royalty portfolio teardown.

The Honest Read

Digital Realty is a legitimate, well-run income producer with a global footprint and a long dividend record. Buy it for the data-center demand story if that is your thesis, not for the SpaceX royalty gloss. The tease price of $173.00 against the $179.01 close shows the stock has already moved since the ad was written, and the honest drivers are cloud and AI, not rocket launches.

Funds From Operations and the Payout

The number that matters most for a data-center REIT is not its reported profit but its funds from operations, the cash-flow measure that strips out the heavy depreciation that real estate accounting imposes. A REIT’s buildings are written down on the books every year even as they keep generating rent, so reported earnings understate the actual cash the business produces. Funds from operations corrects for that, and it is the number investors use to judge whether a dividend is sustainable.

Digital Realty’s dividend should be read against that figure. A payout that sits comfortably below funds from operations leaves room for the company to keep raising the dividend while still funding new buildings. A payout that eats nearly all of it leaves little cushion if occupancy softens. By that measure, Digital Realty has maintained a defensible payout through several expansion cycles, though the yield itself stays modest, in the low single digits.

That modest yield is the quiet part of the SpaceX royalty pitch. The income is real and it grows, but it is a dividend that scales with your stake, not a royalty stream. The headline of up to $11,400 a year is simply what a large position produces at a few percent yield, and the fine print concedes as much. For an income investor, the honest way to think about Digital Realty is as a growing dividend with a long demand runway, not as a backdoor into SpaceX, which has no disclosed, direct relationship with the company.

Ready to see the research? Click here to access Marc Lichtenfeld’s report.

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