I've owned some stocks in my portfolio for many years, but I'm more of a newcomer in the world of REITs, or real estate investment trusts. It's not that REITs are inferior to stocks in any way. It's just that I didn't really start branching out until I learned more about them.
What I really like about owning REITs is that they tend to pay higher-than-average dividends. That's money I can use to reinvest and grow even more wealth.
Furthermore, REITs lend to added diversity to my portfolio. While the stocks I hold are spread out across a range of market sectors, incorporating REITs into my personal mix gives me even more room for growth, as well as protection, during periods of volatility.
Meanwhile, there's a specific REIT I have my eyes on for 2022. And you may want to consider owning it as well.
Industrial space could really explode
The pandemic has caused a notable shift in the way consumers shop. Over the past two years, consumers have increasingly turned to e-commerce over brick-and-mortar stores. Initially, that may have stemmed from health concerns, and understandably so. But now, with the widespread availability of vaccines and quality masks, online shopping may be more a function of convenience than actual necessity.
Either way, digital sales have been booming. Total e-commerce sales for 2021 were estimated at $870.8 billion, as per the U.S. Census Bureau, representing an increase of 14.2% from 2020. And that momentum isn't expected to slow.
Prologis operates an extensive network of warehouses and industrial facilities throughout the U.S., South America, Europe, and Asia. It also offers customized warehousing solutions -- an important thing at a time when so many retailers are upping their e-commerce game.
But what makes Prologis such a good buy right now is that warehousing space is actually in short supply. And as companies ramp up their digital sales, the need for that space is only going to grow. Prologis is in a prime position to capitalize on that boom.
In January, Prologis CEO Hamid R. Moghadam said that demand for the company's 1 billion square foot portfolio had shown no signs of slowing down. And as supply chains ramp up and recover from the bottlenecks that plagued retailers during the latter part of 2021, the need for space should intensify.
As of 2021's fourth fiscal quarter, Prologis's average occupancy rate was an impressive 97.4% for its owned and managed portfolio. The company also maintained a solid level of liquidity, with $5 billion in cash and availability on its credit facilities at year's end. Looking ahead in 2022, Prologis expects an average occupancy rate of 96.5% to 97.5%, which is consistent with recent numbers.
Is Prologis a buy?
To be clear, Prologis isn't a bargain REIT. But for me, it's a REIT worth owning due to the potential for massive growth and demand within the warehousing space.
The more consumers shop online, the more pivotal a role warehouses will play. I'd like to use that shift to my financial advantage at a time when companies are more likely than not to pay a premium for industrial space.