What happened
Shares of Prologis (PLD 1.44%) were climbing last month as the world's largest warehouse operator got a tailwind from the uncertainty in the market, and continued to gain after raising its dividend at the end of February.
According to data from S&P Global Market Intelligence, the industrial REIT finished the month up 11%. The chart below shows the stock's gains over the course of the month.
So what
There was little news out on Prologis during the month, but the REIT, which leases its warehouses to companies like Amazon, FedEx, and Home Depot, is the kind of stock that investors tend to look to during uncertain times, and with rising interest rates, inflation, and rising oil prices and the war in Ukraine, volatility spiked last month.
Image source: Getty Images.
As a landlord, Prologis tends to benefit from high inflation, which translates into higher rents, and the nature of its business means it's less cyclical than most companies so it can better weather economic uncertainty. Prologis is also a solid dividend stock, currently offering a yield of 1.9%. The company raised the payout by 25% at the end of February, a sign of confidence in its cash flow and a reflection of its recent growth. As a REIT, Prologis is required to pay out at least 90% of its income as dividends, which is one reason why REITs tend to make good dividend stocks.
There was one significant news item out on Prologis last month, though it didn't seem to move the stock. Several news sources reported on March 21 that the company had made a $23.1 billion bid for Blackstone's Mileway segment, a portfolio of more than 1,700 warehouses. The deal would be the largest private real estate sale ever, and shows the company looking for new ways to grow as demand boomed during the pandemic thanks to a surge in e-commerce.
Now what
Prologis is now up 57% over the last year, and while the business looks as strong as ever, the stock may be getting stretched as it now trades at a price-to-earnings ratio of 43, a high valuation for what's typically a slow-growing sector.
Investors will get the latest update on the company when it reports first-quarter earnings on April 19. Analysts are expecting 7.7% revenue growth to $1.1 billion and for earnings per share to increase from $0.49 to $0.55. After a boom during the pandemic, growth is likely to moderate as the company faces difficult comparisons.
