The Humongous Data Code
Happy Cashflow Code Day!
Another day to grab some cash flow in just a few minutes and just a few clicks of your mouse!
I hope your summer is going well and you're coming along as we grab some money from the biggest real estate companies in the world!
Today's company will make its third appearance here in the weekly alerts and for a good reason…
So far, using cashflow codes from this company, we've booked a solid $255…
And today, we're going to grab some more!
The company has one of the most sustainable, growth-focused businesses housed in nondescript buildings such as this one…
One of the company's buildings in Canada
With over 310 properties in more than 25 countries, this company is the leader in storing data from all across the globe.
Data is critical for companies, and the amount created each year is simply staggering…
In 2023, there will be more than 3X the amount of data created in 2019…
And the trend says this will just be a blip in a few years…
This creates a huge problem for companies that need to control their data for compliance and governance reasons but don't have the means or expertise to store it.
That's where today's company comes in.
Thanks to strategic acquisitions and build-outs, it's known as the industry leader in data centers, and here's where the gasoline is about to be thrown on the fire…
With everyone talking about integrating AI into their business, data will exponentially increase, which is great news for this company…
It's no wonder they keep raising their dividend, and as you'll see below, it is in a prime position to take advantage of the AI boom…
Time to grab our third chunk of instant cash flow by using this company's specific cashflow code:
DLR231020P00095000
Before we get to all the details, here's what I'm going to cover for you:
- The fundamental story: You'll see why I'm still so excited about this company. If you're ready to make some money from a company on the cutting edge of data storage, you're going to love this opportunity!
- How the transaction works: You'll see how to generate at least $85 in instant cash flow. You'll see the steps involved… and I'll show you a screencast showing how to place this trade in your account.
- Ongoing support: If you're confused by ANYTHING below, simply submit a question here, and I'll do my best to cover it in our upcoming Q&A podcast that we'll email you on Tuesday around 4:00 pm ET. Remember, this is a learning process. So don't be hasty. Learn each week and write down your questions. Then listen to those podcasts to learn even more about what I'm showing you here.
Let's dive in…
Cold Hard Cash on Hot Summer Days
Happy Cashflow Code Day!
It's Friday, and it's time to collect a new rent check…
Before we get into today's newest cashflow code, let's talk about financial markets.
On Monday evening, Fitch Ratings downgraded the U.S. long-term credit rating to AA+ from AAA.
The credit agency cited deep concerns about the deterioration of governance in Washington and overspending…
If you recall, in 2011, the S&P Global Ratings made a similar downgrade after a highly politicized government standoff over the U.S. debt ceiling.
Just like in 2011, this announcement by Fitch Ratings surprised many in Washington…
After the announcement, many took to Twitter and CNBC to shake their fists to the sky, declaring that the U.S. economy is resilient, which is just noise and peacocking.
So what does downgrade mean?
The downgrade isn't going to crash the economy, but this will have an effect on rates.
Right now, the 10-year treasury is trading at 4.17%, which is getting back to October 2022 highs…
This is going to put pressure on the Fed to keep rates at these levels and Washington to either cut spending or raise taxes…
In other words, inflation is looking to swing back higher.
And if that's the case, stagflation seems to be on the horizon…
While that's a concern to be accounted for, it's important to focus on where the opportunity is.
In the current environment, with elevated levels of uncertainty, the importance of cash cannot be overstated…
And if you're a buy-and–cash flow investor like me, finding cash-flow-rich REITs should be at the top of the list.
The best REITs are companies with strong balance sheets that include access to a lot of moolah, and that's why I always tap into these cash cows with my system…
REITs that are “cash cows” create value for their shareholders by investing cash to generate more cash in the future, and the amount of value they create is the difference between cash inflows and the cost of the investments made.
The #1 sign a REIT is generating steady and growing cash flows is when it's able to consistently increase its dividend…
By collecting rent checks from the strongest REITs that have solid debt metrics, well-diversified tenants, and modest payout ratios, the investor has the best opportunity to capitalize on high levels of cash flow that will, in turn, super-charge total returns.
Now you can see why I love our Weekly Cashflow Triggers…
As I show you each week, retiring rich from real estate income doesn't need luck. Nor does it need the headaches of managing tenants, termites, and toilets.
It's only a few clicks and cha-ching!
And that's my goal: Help you generate weekly rent checks with a few clicks of that mouse that beats the market.
And today, we're going to use this very specific cashflow code attached to the company to generate instant cash flow:
DLR231020P00095000
Endless Cash Flow From the Data Revolution
The company I'm going to show you how to generate instant cash flow from today is Digital Realty Trust, ticker symbol: DLR.
Digital Realty invests in data centers that offer a full spectrum of services, including colocation interconnection, dedicated data halls for hyperscale customers, and enterprise hybrid solutions.
Digital Realty Trust owns 310 data centers that serve over 5,000 customers around the globe, with locations in over 25 countries and on 6 continents.
The majority of their annualized base rent (“ABR”) comes from North America at 53%, and cloud providers make up their largest customer base at 39% of their annualized recurring revenue (“ARR”)…
They own the majority (86%) of the data centers in their portfolio, and about half of their customers are investment-grade or equivalent.
Digital Realty IR Deck
For years, small investors have been excluded from a rapidly-expanding multibillion-dollar industry…
Until now, exclusive access to Wall Street and venture capital has been limited only to the wealthy elite…
But not anymore — now, everyday investors can join in on the action!
Major Wall Street players like Blackrock and Goldman Sachs, as well as tech powerhouses Apple and Google, have contributed billions of dollars to the trend, which is still in its infancy.
The best part? This growth has only begun!
By uncovering a strategy for average real estate investors, I have unveiled an enormous opportunity to cash in on both tremendous gains and reliable passive income…
Data centers are a critical piece of the digital infrastructure that is becoming increasingly important to everyday life as they enable cloud computing, data storage, and e-commerce to run smoothly…
Data centers are part of the “e-commerce trifecta” along with cell towers and logistic properties.
The emergence of Software-as-a-Service (SaaS) companies is transforming the way we do business…
According to the most recent market research report by Deloitte, there are currently 500 dynamic businesses in the United States that display remarkable growth…
The unbelievable power of the digital economy is evident, and I don't expect this trend to slow down anytime soon…
There has been a dramatic rise in enterprises dedicated to software engineering, big-data evaluation, cloud computing, and artificial intelligence…
On top of that, there is an ever-increasing need for rapid and reliable data production, usage, and storage…
As we all continue forward into this digital era, the technology that is available to us will only progress more and more…
No matter your opinion of the ever-increasing role of technology in our lives, you should still ensure that your investment portfolio has a stake in this expanding industry…
The Best Way to Invest in Data Centers Isn't With Risky Tech Stocks
The chart below shows how much data we create and store every year…
You can see how it's growing, with a near-doubling of size every three years!
My favorite investment allows me to make money from an array of companies in the cozy confines of my own home!
All it takes is the cashflow trigger above…
If you want to enjoy the booming data industry, then Digital Realty (DLR) is your ticket. I'm sure you'll love it as much as I do – collecting rent checks has never been easier!
This REIT stands out as the top performer in its industry for investing in data centers…
Data centers are infrastructures that store, process, and send colossal volumes of data for companies or operations…
They can range from a single room containing essential IT tools in small businesses to expansive complexes for larger organizations…
No matter the size, these facilities enable corporations of all sizes to access crucial digital information anytime and anywhere with reliable accuracy…
World's leading businesses Goldman Sachs, JP Morgan, and Blackrock, have joined forces to provide billions of dollars in capital flow for this trend.
Apple and Google followed suit by investing a combined total of $10.9 billion…
Then Amazon committed to adding a whopping sum of over $34 billion – we remain in the early stages!
Right now, Digital Realty is down 32% from January 2022.
During bear markets, great companies or real estate become priced too low and make great buying opportunities…
This is why more millionaires are created during slowdowns…
As Digital Realty continues to show steady growth, its share price is declining and thereby making it an even more appealing investment opportunity…
During its most recent earnings release, Digital Realty missed on revenue but affirmed its 2023 core FFO (funds from operations).
Right now, Digital Realty pays a 4% dividend to stockholders, which means buyers looking for a safe and strong yield will hold prices near this level…
And since there's growth, there's potential for upside while investors collect the dividend.
About 58% of Digital Realty's total revenue comes from North America… 27% comes from Europe and the Middle East… 10% comes from Asia and Pacific regions… and 5% comes from Latin America.
And it has properties in the world's largest metro areas…
These properties are especially valuable now because of supply chain issues…
It's difficult – and costly – to build new data centers… especially when you can't buy components at scale.
It's had 17 consecutive years of dividend increases, which indicates a well-run REIT.
Source: DLR investor Deck March 31, 2023
That's why I see the stock's recent pullback as a great opportunity for us to generate cash flow today and in 2023…
So let's collect our weekly rent check using this cashflow code…
The Humongous Data Cashflow Code
Here's this week's cashflow code we're going to use: DLR231020P00095000
At last glance, this cashflow code is trading between $.75 and $.95 per contract.
So that means for every contract sold, I'm going to collect between $75 and $95 of cash flow per contract. If you sell more than one contract, the cash flow you'd generate would go up.
How will this cashflow code generate that cash? Well, this cashflow code identifies the Digital Realty Trust (DLR) October 20, 2023, $95 put option that we're selling for cash. (Module 3 of the quick start series specifically covers options pricing and how to conduct these transactions if you need a refresher.)
Here's a screencast of me finding this cashflow code and entering the transaction in my brokerage account:
Here are the instructions written out…
Action-to-Take: Sell-to-open Digital Realty Trust (DLR) October 20th, 2023, $95 put option
Here's what I do while in a brokerage account if you're not just copying and pasting the cashflow code. (Remember, depending on what brokerage platform you're using, it might look different than my video. But these instructions should help.)
Step 1: I type in the ticker symbol DLR
Step 2: I open the options chain for the October 20, 2023 expiration cycle.
Step 3: I locate the $95 “PUT” strike, which is located in the October 20, 2023 expiration cycle
Step 4: I double-checked the ticker symbol, expiration, strike and options contract type or what I call the “cash flow code”: DLR231020P00095000
Step 5: I click on the “BID” price to open the order entry menu. (The bid price will be lower price than the ask price) The order entry MUST say “SELL” & “SINGLE”
Step 6: I select how many contracts to sell-to-open (remember from the quick-start series, this strategy is to “selling-to-open” or “STO… not buying.)
Step 7: I enter my price at $.85 since prices are trading between $.75 and $.95… $.85 is in the middle of the market and will likely get filled at that price which is why I chose that.
Step 8: Click “Confirm & Send” to review the order. This is where I double-check again to make sure that it matches the exact cashflow code, quantity, buying power effect, and that I'm selling-to-open.
Step 9: Then I press “send”
Or, if you're using ThinkorSwim, you can paste the pre-populated order with this code SELL -1 DLR 100 20 OCT 23 95 PUT @.85 LMT
Remember, it's best to use your paper trading account for this starting out. After you've done it successfully in your paper trading account, if you feel confident enough, then you can replicate it in a real money account.
Now, this instant cashflow transaction in a margin account would've meant that the broker would have set aside $950.50 in buying power for every put contract we sold. (I discuss margin accounts in detail in Module 2 of the quicks start series.)
You don't have to use margin, but if you do, that's important to understand and ask questions about.
This margin calculation is based on the broker's margin schedule, which is determined by the current expected range. This requirement could increase, which is why you'd want to have a cushion of cash in your account if you use margin on these trades. That helps you make sure you don't get into trouble.
Now, if we wanted to use a cash-secured approach (cash-secured put-selling is also covered with JP in Module 2!) on this transaction, we would've used a cash account.
In that case, the broker would set aside $9,415 for every put sold.
This cash set aside is to make sure that if DLR share prices started dropping below the strike price by expiration, I would be able to take on the risk of buying back the stock instead of keeping my cash flow.
Let's play out a few scenarios…
Ok, so here's how I am going to manage this cash flow position.
Best case: I'm going to be looking to buy-to-close the Digital Realty Trust (DLR) October 20, 2023, $95 put option contract at a 55% profit or at $0.40 per contract. The reason is that we want to manage to keep our profits and reduce our market exposure. The stock market moves, and we want to dance with it, not stand still. Once we lock in our profit, we can redeploy for another opportunity with more cash flow opportunity.
So, best case scenario… generate and keep instant cash flow.
Then rinse and repeat…
Worst case: We don't have to worry about Digital Realty Trust (DLR) going bankrupt, so the real risk is short-term market volatility that could push shares below our $94.15 (strike price – premium collected).
If that does happen in the short term, I'll buy-to-close this position and roll it out for more time while collecting more cash flow.
So, in other words, we would just need a little time for the market to go in our favor. This will take a little more buying power, and why we always want to keep 50% of our buying power available.
Next steps…
Ok, so this alert covered A LOT…
Read this multiple times… write down your questions as you go.
And then, submit them on this page in the question box. I’ll answer them in an upcoming Q&A podcast. Those podcasts are sent to you each week, and I’ll do my best to get to everyone’s specific questions.
Josh Belanger
Editor, Weekly Cashflow Triggers
