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Prologis (PLD) Rewards Investors With a 10.3% Dividend Hike
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Boosting shareholders’ wealth, Prologis, Inc. (PLD - Free Report) recently announced a 10.3% hike in its quarterly cash dividend to 96 cents per share from 87 cents paid out in the prior quarter. The increased dividend will be paid out on Mar 29 to shareholders of record as of Mar 18, 2024.
The latest dividend rate marks an annualized amount of $3.84 per share compared with the prior rate of $3.48. Based on the company’s share price of $133.44 on Feb 22, the latest hike results in a dividend yield of 2.88%.
Solid dividend payouts are the biggest enticements for real estate investment trust (REIT) investors and Prologis remains committed to that. Prior to this hike, In February 2023, the company’s board hiked its quarterly dividend by 10% to 87 cents per share. Moreover, Prologis has increased its dividend five times in the last five years and has a five-year annualized dividend growth rate of 13.33%. Check Prologis’ dividend history here.
Prologis provides industrial distribution warehouse space in some of the busiest distribution markets worldwide. The properties of the company are typically located in large, supply-constrained infill markets in close proximity to airports, seaports and ground transportation facilities, which facilitates rapid distribution of customers’ products. Prologis’ strategically located facilities and its ability to generate sufficient cash flow through its operating platform are reflected in the latest hike.
In the fourth quarter of 2023, 43.7 million square feet (msf) of leases commenced in the company’s owned and managed portfolio, with 36.8 msf in the operating portfolio and 6.9 msf in the development portfolio. The average occupancy level in Prologis’ owned and managed portfolio remained high at 97.1%.
For 2024, management expects occupancy in the band of 96.50-97.50%, with occupancy likely to be down in the first quarter and improve for the remainder of 2024. The company projects its annual market rent growth will average between 4-6% over the next three years, with 2024 being modestly positive and ramping thereafter. Also, our estimate points to a year-over-year increase of 9.6% in rental revenues in 2024.
Prologis has capitalized on growth opportunities through acquisitions and developments. Its investments over the years comprised a wide array, including the largest M&A transactions in the real estate sector and individual off-market deals below $5 million.
In 2023, the company’s share of building acquisitions amounted to $733 million. Development stabilization aggregated $3.15 billion, while development starts totaled $3.4 billion. For 2024, it anticipates acquisitions at Prologis share between $500 million and $1 billion, while development starts are expected in the range of $3.0-$3.5 billion.
On the balance sheet front, this industrial REIT maintains a healthy balance sheet position, with no significant debt maturities until 2026. As of Dec 31, 2023, its liquidity amounted to $6 billion. It also enjoyed credit ratings of A3 (Outlook Stable) from Moody’s and A (Outlook Stable) from Standard & Poor’s, as of the same date, enabling it access to the debt market at favorable rates. Given its balance sheet strength, the company seems well-positioned to carry on with its growth endeavors.
Moreover, Prologis’ return on equity (“ROE”) is 5.29%, significantly higher than the industry’s ROE of 3.05%. Prologis churns cash flow of $5.42 per share compared with the industry’s average of $1.77. Its projected sales growth of 9.56% is higher than the industry’s average of 3.14%.
With ample financial flexibility, the company remains well-poised to respond to any challenges and bank on growth opportunities. Moreover, with a solid operating platform, opportunities for growth and a decent financial position compared with the industry, we expect the latest dividend rate to be sustainable.
Shares of this Zacks Rank #3 (Hold) company have gained 19.1% over the past three months compared with the industry’s rise of 6.2%.
The Zacks Consensus Estimate for EGP’s 2024 funds from operations (FFO) per share is pegged at $8.29, suggesting year-over-year growth of 6.4%.
The Zacks Consensus Estimate for SLG’s 2024 FFO per share stands at $5.88, indicating an increase of 19% from the year-ago reported figure.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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Prologis (PLD) Rewards Investors With a 10.3% Dividend Hike
Boosting shareholders’ wealth, Prologis, Inc. (PLD - Free Report) recently announced a 10.3% hike in its quarterly cash dividend to 96 cents per share from 87 cents paid out in the prior quarter. The increased dividend will be paid out on Mar 29 to shareholders of record as of Mar 18, 2024.
The latest dividend rate marks an annualized amount of $3.84 per share compared with the prior rate of $3.48. Based on the company’s share price of $133.44 on Feb 22, the latest hike results in a dividend yield of 2.88%.
Solid dividend payouts are the biggest enticements for real estate investment trust (REIT) investors and Prologis remains committed to that. Prior to this hike, In February 2023, the company’s board hiked its quarterly dividend by 10% to 87 cents per share. Moreover, Prologis has increased its dividend five times in the last five years and has a five-year annualized dividend growth rate of 13.33%. Check Prologis’ dividend history here.
Prologis provides industrial distribution warehouse space in some of the busiest distribution markets worldwide. The properties of the company are typically located in large, supply-constrained infill markets in close proximity to airports, seaports and ground transportation facilities, which facilitates rapid distribution of customers’ products. Prologis’ strategically located facilities and its ability to generate sufficient cash flow through its operating platform are reflected in the latest hike.
In the fourth quarter of 2023, 43.7 million square feet (msf) of leases commenced in the company’s owned and managed portfolio, with 36.8 msf in the operating portfolio and 6.9 msf in the development portfolio. The average occupancy level in Prologis’ owned and managed portfolio remained high at 97.1%.
For 2024, management expects occupancy in the band of 96.50-97.50%, with occupancy likely to be down in the first quarter and improve for the remainder of 2024. The company projects its annual market rent growth will average between 4-6% over the next three years, with 2024 being modestly positive and ramping thereafter. Also, our estimate points to a year-over-year increase of 9.6% in rental revenues in 2024.
Prologis has capitalized on growth opportunities through acquisitions and developments. Its investments over the years comprised a wide array, including the largest M&A transactions in the real estate sector and individual off-market deals below $5 million.
In 2023, the company’s share of building acquisitions amounted to $733 million. Development stabilization aggregated $3.15 billion, while development starts totaled $3.4 billion. For 2024, it anticipates acquisitions at Prologis share between $500 million and $1 billion, while development starts are expected in the range of $3.0-$3.5 billion.
On the balance sheet front, this industrial REIT maintains a healthy balance sheet position, with no significant debt maturities until 2026. As of Dec 31, 2023, its liquidity amounted to $6 billion. It also enjoyed credit ratings of A3 (Outlook Stable) from Moody’s and A (Outlook Stable) from Standard & Poor’s, as of the same date, enabling it access to the debt market at favorable rates. Given its balance sheet strength, the company seems well-positioned to carry on with its growth endeavors.
Moreover, Prologis’ return on equity (“ROE”) is 5.29%, significantly higher than the industry’s ROE of 3.05%. Prologis churns cash flow of $5.42 per share compared with the industry’s average of $1.77. Its projected sales growth of 9.56% is higher than the industry’s average of 3.14%.
With ample financial flexibility, the company remains well-poised to respond to any challenges and bank on growth opportunities. Moreover, with a solid operating platform, opportunities for growth and a decent financial position compared with the industry, we expect the latest dividend rate to be sustainable.
Shares of this Zacks Rank #3 (Hold) company have gained 19.1% over the past three months compared with the industry’s rise of 6.2%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are EastGroup Properties (EGP - Free Report) and SL Green Realty (SLG - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for EGP’s 2024 funds from operations (FFO) per share is pegged at $8.29, suggesting year-over-year growth of 6.4%.
The Zacks Consensus Estimate for SLG’s 2024 FFO per share stands at $5.88, indicating an increase of 19% from the year-ago reported figure.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.