Prologis (PLD 0.69%) recently reported strong second-quarter results. The industrial real estate investment trust (REIT) delivered double-digit growth, driven by robust rental increases, as existing leases expired and repriced to market rates.

The company expects to continue growing at a brisk pace in the future. Despite that outlook, shares of the industrial REIT currently sit more than 10% below their 52-week high, which has pushed its dividend yield up to 2.8%. That makes it look like a screaming buy right now, especially for those desiring an attractive and rapidly rising stream of dividend income. 

The scorching growth continues

Prologis continues to grow its income briskly. The company's same-store net operating income (NOI) increased by 10.7% during the first quarter. In-place rents on the company's existing long-term leases increased by about 2.5%.

Meanwhile, new and renewal leases signed in the quarter surged 78.5%, compared to prior rents on the same space, which was an all-time high. Rents grew fastest in the U.S., skyrocketing 91.7% in the period.

Prologis' core funds from operations (FFO) grew even faster. The company generated $1.83 per share, a staggering 64.9% above last year's second-quarter total of $1.11 per share. However, this year's tally included $0.58 per share of net promote income from its strategic capital business (its share of the profits from investment funds it manages for third-party investors).

Excluding that additional income, core FFO still increased by an impressive 12.6%. In addition to rent growth, core FFO got a boost from recently completed development projects and acquisitions, including its $23 billion merger with Duke Realty.

More growth, as far as the eye can see

Prologis signs long-term leases with tenants, typically featuring relatively modest annual rental rate escalations. Because of that, it's not yet capturing the significant surge in market rents over the past few years.

In the company's estimation, existing rental rates across its portfolio are 66% below current market rents. That gives the company significant embedded rent growth.

Prologis estimates that lease rollovers represent nearly $3 billion (or $2.85 per share) in future FFO growth. That drives its view that net operating income will rise by around 8% to 10% per year for the next several years as legacy leases steadily roll over to market rents.

That embedded growth assumes additional market rent growth, which is unlikely. Rents have already risen another 5% this year across its markets. That has it forecasting 7% to 9% rent growth for 2023.

The company does see some near-term rent growth moderation due to increased supply and economic uncertainty. However, it expects rents will continue rising over the medium term, driven by "escalating replacement costs, growing barriers to new supply and ongoing secular drivers of demand," according to comments by CFO Tim Arndt on the second-quarter call. 

In addition to rent growth, Prologis expects to continue expanding its portfolio. It recently agreed to acquire $3 billion of real estate at attractive returns. Meanwhile, it expects to start between $2.5 billion and $3 billion of new developments this year. These investments will help boost its income in the coming quarters.

Prologis has ample financial flexibility to continue making new investments. It has a vast land bank that can support $38 billion of future development build-out to continue capitalizing on the growing demand for logistics real estate. Meanwhile, it has significant corporate liquidity and substantial investment capacity in its strategic funds to continue making accretive acquisitions as opportunities arise. 

A fabulous dividend growth stock that's still on sale

Prologis' growth looks unstoppable. The leading logistics REIT has an enormous embedded rental growth opportunity as legacy leases expire and reprice to much higher market rents. Meanwhile, it has the financial flexibility to continue making value-enhancing investments.

These catalysts should enable the REIT to continue growing its dividend rapidly. It increased the payout by 10% earlier this year and has grown it by a 12% compound annual rate over the last five years (double the pace of the S&P 500). With shares down, Prologis' dividend and growth profile makes it look like a screaming buy these days.