Prologis: Warehouses, Data & Dividends

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Prologis (PLD 2.50%), a name that sounds suspiciously like a forgotten Roman emperor, is, in fact, a Real Estate Investment Trust. And a remarkably successful one at that. They deal in warehouses, those vast cathedrals of consumerism where things go to be… well, things before they arrive at your doorstep. They also dabble in data centers, which are essentially very secure, climate-controlled rooms full of blinking lights and the collective anxieties of the modern age. But we’re not here to discuss existential dread; we’re here to talk dividends. Currently yielding a respectable 3.1%, which is a good deal more than you get leaving your gold under the mattress (and significantly less likely to attract dragons).

Over the last five years, their payout has grown at a rate that would make a particularly ambitious goblin blush – 13% annually. The S&P 500, bless its index-shaped heart, managed a mere 5%, while other REITs trailed at 6%. It’s as if Prologis has discovered a particularly efficient form of alchemy, turning bricks and mortar into shareholder happiness.1

One for the Record Books

2025 was, by all accounts, a good year for Prologis. They generated $5.86 per share of Core Funds From Operations (FFO) – a term that sounds like something out of a science fiction novel, but is, in reality, a measure of how much cash a REIT is actually generating. It was 6% higher than the previous year, a result achieved through a combination of clever contractual arrangements (they’re very good at getting people to sign things) and the expansion of their portfolio through both building new facilities and acquiring existing ones. They stabilized nearly $2.3 billion of development projects and completed $1.7 billion of acquisitions. It’s a lot of buildings. A truly impressive amount of buildings.

Demand for space in these buildings was, shall we say, robust. They signed leases for a record 228 million square feet. That’s enough space to house a small country, or a very large collection of garden gnomes. This high occupancy rate, coupled with the completion of new development projects, promises continued growth in 2026.

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The Momentum Continues in 2026

Prologis anticipates that its FFO will rise to a range of $6.05 to $6.25 per share in 2026, a modest but respectable increase of 3% to 7% over 2025. They expect their existing portfolio to deliver net operating income growth of 4.3% to 5.2%, and plan to stabilize between $2.3 billion and $2.8 billion in new development projects, along with $1 billion to $1.5 billion in acquisitions. They’re not slowing down.

But it’s not just about warehouses anymore. Prologis is also investing heavily in new development projects, including a rather ambitious foray into data centers. They’ve expanded their data center power pipeline to 5.7 gigawatts of capacity, enough to power a small city (or a very large collection of servers). They’re also installing solar and battery storage at their facilities, surpassing 1 GW of installed capacity last year. It’s a diversification strategy that suggests they’re thinking beyond the immediate future, and perhaps preparing for a world where everything is delivered by drones.2

A Top-Tier Dividend Growth Stock

Prologis is, in essence, capitalizing on our insatiable appetite for stuff. By securing leases that support high occupancy levels and continuing to expand their portfolio, they’re creating a virtuous cycle of growth. They anticipate continued earnings growth in 2026, which should drive further dividend growth. That makes them a compelling dividend growth stock to buy and hold for the long haul. It’s not glamorous, it’s not revolutionary, but it’s solid. And in a world increasingly built on shifting sands, sometimes solid is exactly what you need.

1 The alchemy, of course, isn’t literal. It’s a metaphor. Although, one can’t help but wonder if there isn’t a secret society of REIT alchemists, quietly manipulating the market from the shadows. They probably have very comfortable offices.

2 The drones, naturally, will require charging stations. And those charging stations will require power. And that power, conveniently, can be supplied by Prologis. It’s a beautifully circular system. One might even call it… efficient.

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2026-01-22 21:42