5 Reasons to Add Prologis Stock to Your Portfolio Right Now

Adding the industrial real estate investment trust (REIT), Prologis, Inc. PLD, to your portfolio seems a wise idea, given the strength of its fundamentals and solid prospects. Its scale drives efficiency, and solid balance sheet strength aids its growth endeavors. The company is also converting some of its warehouses into data centers to capitalize on the growing opportunity in this asset category.Moreover, the recent estimate revision trend indicates that analysts are bullish on this stock. Over the past two months, the Zacks Consensus Estimate for 2025 FFO per share has moved upward to $5.77. The same for 2026 has also been trending northward. While shares of this Zacks Rank #2 (Buy) REIT have rallied 7% in the past three months, outperforming the industry's growth of 0.2%, there is still room for further appreciation.Image Source: Zacks Investment ResearchFactors That Make Prologis Stock a Solid PickHealthy Operating Performance: Prologis provides industrial distribution warehouse space in some of the busiest distribution markets across the globe. The company’s properties are typically located in large, supply-constrained infill markets in proximity to airports, seaports and ground transportation facilities, which facilitates rapid distribution of customers’ products. The solid demand for Prologis’ strategically located facilities has driven healthy operating performance over the past several quarters. In the second quarter of 2025, 52.1 million square feet of leases commenced in the company’s owned and managed portfolio. The retention level was 74.9% in the quarter. For 2025, management has issued its guidance range for average occupancy in the band of 94.75-95.25%. The company’s new and renewal leases are expected to translate into considerable rises in future rental income. Our estimate points to a year-over-year increase of 7.5% and 4.9% in rental revenues for 2025 and 2026, respectively.Acquisitions & Development: Prologis continues to bolster its presence in high-barrier, high-growth markets through strategic acquisitions and development activities. In the first half of 2025, the company’s share of acquisitions amounted to $1.15 billion. During the same period, the company’s consolidated development starts totaled $1.49 billion, of which 69.3% were build-to-suit projects. Prologis’ investments over the years comprise a wide array, including the largest M&A transactions in the real estate sector and individual off-market deals below $5 million.For 2025, the company anticipates acquisitions at Prologis share between $1 and $1.25 billion. Development starts are expected in the range of $2.25-$2.75 billion.Data Center Diversification: Prologis is positioning itself to tap into the rapidly expanding AI market by converting select properties in major population centers into high-performance data centers. A recent reit.com news noted that while speaking at Prologis’ Groundbreakers 2025 event, Chairman and CEO Hamid Moghadam called this initiative a “huge opportunity,” pointing out that these facilities could deliver the low latency critical for the AI inference market.To capitalize on this growing opportunity, Prologis is focusing on both warehouse conversions and ground-up developments. For investors, this move represents a potential growth catalyst, as the REIT leverages its prime locations to expand beyond traditional logistics assets.Balance Sheet & Cash Flow Strength: Prologis enjoys a healthy balance sheet position with ample flexibility. As of June 30, 2025, this industrial REIT had a total available liquidity of $7.1 billion. As of the same date, the company's weighted average interest rate on its share of the total debt was 3.2%, with a weighted average term of 8.5 years. Debt to adjusted EBITDA was 5.1X. In addition, the company’s credit ratings as of June 30, 2025 were A2 (Outlook Positive) from Moody’s and A (Outlook Stable) from Standard & Poor’s, enabling the company to borrow at an advantageous rate.Prologis’ current cash flow growth is projected at 14.8% compared with the 2.68% growth projected for the industry. Moreover, this REIT’s trailing 12-month return on equity (ROE) highlights its growth potential. The company’s ROE of 5.96% compares favorably with the industry’s 3.21%, reflecting that PLD is more efficient in using shareholders’ funds than its peers.Given its balance sheet strength and prudent financial management, the company is well-poised to capitalize on growth opportunities.Dividend: Solid dividend payouts are arguably the biggest enticements for REIT shareholders, and Prologis remains committed to that. In the last five years, Prologis has increased its dividend five times, and its five-year annualized dividend growth rate is 12.66%. Given the company’s solid operating platform, opportunities for growth, decent financial position compared with the industry and our favorable FFO growth rate estimate for full-year 2025 of 3.5%, this dividend rate is expected to be sustainable in the near term. Check Prologis’ dividend history here.Other Stocks to ConsiderSome other top-ranked stocks from the REIT sector are VICI Properties VICI and W.P. Carey WPC, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for VICI Properties’ 2025 FFO per share is pegged at $2.39, suggesting a 5.75% increase year over year.The Zacks Consensus Estimate for W.P. Carey’s 2025 FFO per share is pegged at $4.88, calling for a rise of 3.83% year over year.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.Quantum Computing Stocks Set To SoarArtificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.Today, you have a chance to position your portfolio at the forefront of this technological revolution. In our urgent special report, Beyond AI: The Quantum Leap in Computing Power, you'll discover the little-known stocks we believe will win the quantum computing race and deliver massive gains to early investors.Access the Report Free Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Prologis, Inc. (PLD): Free Stock Analysis Report W.P. Carey Inc. (WPC): Free Stock Analysis Report VICI Properties Inc. (VICI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks