Access to virtually every product at the click of a button and lightning-fast next-day delivery may be the norm to most Americans today, but it's important to remember e-commerce is still very much on the rise. As of Q3 2021, e-commerce sales made up only 13% of all retail sales, leaving a lot of room to grow.

Based on historical data, e-commerce sales are only heading up. Over the past five years, they have grown 166.7%, and sales are projected to jump another 50% by 2025 to a whopping $7 trillion. 

One company that has greatly benefited from the growth of e-commerce is STAG Industrial (STAG -0.31%). This real estate investment trust (REIT) specializes in the operation of industrial and logistics warehouses, with roughly 40% of its portfolio directly servicing the e-commerce industry. Given today's market volatility, share prices are down almost 11% year to date, making it a great time to double down on this dividend-paying growth stock.

Person working forklift talking to other co-workers in industrial warehouse.

Image source: Getty Images.

A closer look at STAG

STAG is one of the largest industrial REITs in the space, with interest or ownership in 517 buildings for a total of 103.4 million square feet of leasable industrial space across 60 metro markets. While e-commerce is the primary industry it serves, it's diversified across 45 different industries within this sector. Its largest tenant, Amazon, makes up 3.8% of its average base rent (ABR), and the company's largest market exposure among its tenants is less than 8% of its ABR. A diversified portfolio is beneficial because it reduces risk exposure in the event of a downturn within a given industry.

As of Q3 2021, Stag added 39 properties to its portfolio in 2021 and is expected to close on nine more properties in Q4. These transactions, which totaled $654 million, added 6.6 million square feet to its portfolio and will directly translate into an increase in its revenues, funds from operations (FFO), and earnings potential, which has already had an impressive run.

As the chart shows, over the past five years, STAG's FFO per share has grown more than 36%. Annual revenues increased over 60%, and net income saw an over 546% jump. This strong growth has fueled investor attention and caused share prices to rise 84% during that time, providing investors with a more than 132% total return.

STAG Chart

STAG data by YCharts

Great industrial exposure at an affordable price

E-commerce isn't slowing down -- if anything, it's gaining momentum. The more demand we see for online shopping, fast shipping, and easy returns, the more demand there will be for industrial space. The company's occupancy rate as of Q3 2021 was 95.9% for its total portfolio, including recent acquisitions, while its blended cash rent change grew by 8%.

STAG's share prices, while down today, are still well valued, with a price that is 20.6 times its FFO, a bargain when compared to the peer average of 35 times its FFO. STAG is also in a strong financial position, having a fairly low debt ratio of 4.8 times its net debt-to-EBITDA and $739 million of cash and cash equivalents on hand, which is more than enough to cover its debt obligations.

In addition, STAG is one of the higher dividend-paying industrial REITs, paying a 3.39% dividend, with 10 years of consistent dividend raises.

STAG is favorably valued as it relates to its performance. It has clear long-term demand drivers and major opportunities for growth, given its acquisition activity and exposure to the e-commerce market. I will be buying STAG in my personal portfolio after Motley Fool trading guidelines allow me to do so. Investors looking for a reliable dividend stock with growth potential should definitely consider STAG.