ProLogis (PLD) - Dividends to Rise over 200%?

ProLogis (PLD) sits on a 5.8% dividend yield. The dividend however is way below the historical average. Will the global economic recovery catapult the stock back to it's former highs?

There are few more underrated commodities in this world than top quality industrial real estate. With the global economy kicking back into gear and companies looking to ramp up their supply chains, demand for property in this sector is on the up.
 
Investors looking to participate in this trend can look at ProLogis (PLD) which trades in the Real Estate sector of the NYSE and offers a very attractive dividend yield of around 5.80%.
 
Founded in 1991, ProLogis (PLD) has more than 475 million square feet of industrial space in North America, Europe and Asia. Since listing in 1994 the company has grown from around $400 million in assets under management in the United States to a global player with properties in 18 different countries and more than $35 billion in assets.
 
After a weak 2008 where the company reported a net loss per share of $1.82, ProLogis (PLD) has started to bounce back. Last year it lost $0.01 per share on $1.2 billion in revenue.
 
When the company reported first quarter results earlier this year it said it was encouraged by the positive trends in key global economic indicators. However, industrial real estate generally lags the broader economy and, although activity is being seen, it has yet to translate into increased occupancies. Fundamentals continued to bump along the bottom during the first quarter, and the company’s operating results reflect a market still in transition. Activity levels remain stronger than six months ago, long-term demand drivers continue to strengthen, and it is anticipated these trends will support increases in overall occupancy levels later this year.
 
The company has guided that it expects net earnings per share (EPS) to come in between $0.09 – $0.13 and at the end of the first quarter it had 89.2% of its property portfolio let.
 
ProLogis (PLD) has also started three major industrial developments to grow its portfolio. The first is an 115,000-square-foot building for a third-party logistics provider in Budapest, Hungary. The second is a 250,000-square-foot expansion in the U.K. for a British-based home furnishing retailer and during the quarter, development also began on ProLogis Parc Kawajima, a 1.55-million-square-foot inventory distribution facility located in Tokyo, slated for completion in mid-2011.
 
Since listing in 1994 the company has a track record of raising its dividend every year up until 2008 where pressure in the capital markets and a restructuring of the portfolio knocked the company. Given an economic recovery, however, dividends could well pop back up to levels around $2 per share. If not, the yield is still over 5%, which is hard to match through any savings or checking account.
 
However with the global economy starting to tick over and industrial property playing catch-up in the rebound, ProLogis may offer the patient dividend seeking investors an interesting option for their portfolio.
 
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Comments

  • YoGabba

    August 17, 2010

    Pop Back?

    The most PLD historical data shows is about $0.60/share. So I am not sure it can pop back to $2.00/share if its never been there.

  • Sean Riskowitz

    August 23, 2010

    2008 Annual Dividend was $2.07

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