Investors who purchase real estate investment trusts (REITs) have to often consider what the underlying operations of each outfit does and what the earnings power is when calculating dividend payments into the future. After all, REITs pay out 90% or more of their taxable income to maintain a favorable tax status. A new acquisition of Telx by Digital Realty Trust Inc. (NYSE: DLR) brings up the question of whether the move will help bolster the REIT’s dividend or whether it adds leverage.

Digital Realty is acquiring Telx for almost $1.9 billion. To help pay for it, Digital Realty is also conducting a $700 million common stock offering. The Telx buyout should help increase the operation’s exposure to retail colocation while also contributing to the adjusted funds from operations.

While this deal was well-telegraphed in the news and while investors have to wonder how much this will matter, Digital Realty has just north of a $9 billion market cap. This is effectively the “REIT of the Cloud” and many investors would have considered this a top technology stock in years past rather than a REIT.

The merger will increase its revenue exposure to colocation and to the interconnection services markets, will help it grow and will allow for potential cross-selling to Telx customers. The initial indication is that this will be accretive to earnings. Another boost will come from cross synergies and savings ahead.

Why all of this matters is that Digital Realty already has close to a 5% dividend yield. If the deal is accretive, and if it has to pay out at least 90% of net income to shareholders, then that might imply dividend growth.

Digital Realty saw its dividend payout rise to $0.85 per share from $0.83 in the first quarter of 2015. A year or more earlier it was $0.78.

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The analyst reports that 24/7 Wall St. has seen were on the deal:

• Canaccord Genuity believes this combination will help create and extend Digital Realty’s global platform. It will now operate 137 properties across 30 markets in 10 countries. The firm reiterated its Buy rating and $77 price target.
• Merrill Lynch maintained its Neutral rating and its $71.00 price objective.
• Stifel has a Buy rating and raised its target to $76 from $73.

At $67.80 per share, Digital Realty has a 52-week trading range of $60.05 to $75.39. It has a consensus analyst price target of $70.47.

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