Latest news with #keymarkets
Globe and Mail
a day ago
- Business
- Globe and Mail
Is it Wise to Retain Prologis Stock in Your Portfolio Now?
Prologis PLD is poised to gain from its strategically located modern distribution facilities in key markets globally and scale. Prudent buyouts and development and a healthy balance sheet will drive growth. The company is also converting some of its warehouses into data centers to capitalize on the growing opportunity in this asset category. However, amid macroeconomic uncertainty and geopolitical issues, customers remain focused on cost controls and delay their decision-making with respect to leasing. Elevated interest expenses add to PLD's concerns. What's Aiding Prologis Stock? Prologis provides industrial distribution warehouse space in some of the busiest distribution markets across the globe. The properties of the company are typically located in large, supply-constrained infill markets in close proximity to airports, seaports and ground transportation facilities, which facilitates rapid distribution of customers' products. The solid demand for Prologis' strategically located facilities has driven healthy operating performance over the past several quarters. The company's new and renewal leases are expected to translate into considerable rises in future rental income. Our estimate points to a year-over-year increase of 6.3% in rental revenues in 2025. Prologis continues to bolster its presence in high-barrier, high-growth markets through strategic acquisitions and development activities. In the first quarter of 2025, the company's share of acquisitions amounted to $811 million. For 2025, the company anticipates acquisitions at Prologis share between $750 million and $1.25 billion. Development starts are expected in the range of $1.5-$2.0 billion. Prologis maintains a healthy balance sheet position with ample flexibility. As of March 31, 2025, this industrial REIT had a total available liquidity of $6.52 billion. As of the same date, the company's weighted average interest rate on its share of the total debt was 3.2%, with a weighted average term of 8.7 years. In addition, as of March 31, 2025, the company's credit ratings were A2 (Outlook Positive) from Moody's and A (Outlook Stable) from Standard & Poor's, enabling the company to borrow at an advantageous rate. The demand for high-performing data centers is likely to increase in the coming years amid high growth in cloud computing, the Internet of Things (IoT), big data and elevated requirements for third-party IT infrastructure. To capitalize on this growing opportunity, Prologis is focusing on both warehouse conversions and ground-up developments, which will aid future revenue growth. Solid dividend payouts are arguably the biggest enticements for REIT shareholders, and Prologis remains committed to that. In the last five years, Prologis has increased its dividend five times, and its five-year annualized dividend growth rate is 13.71%. Given the company's solid operating platform, opportunities for growth and decent financial position compared with the industry, this dividend rate is expected to be sustainable in the near term. Check Prologis' dividend history here. Analysts seem bullish on this Rank #3 (Hold) company. The Zacks Consensus Estimate for its 2025 FFO per share indicates a favorable outlook as it has moved marginally northward over the past month to $5.70. What's Hurting Prologis Stock? In a volatile and still elevated interest rate environment and geopolitical concerns, customers remain focused on cost controls and delaying their decisions with respect to decision-making for leasing. As such, demand remains subdued, and this trend is expected to continue in the near term. Despite the Federal Reserve announcing rate cuts in the second half of 2024, the interest rate is still high and is a concern for Prologis. The company's consolidated debt as of March 31, 2025 was $32.26 billion. For 2025, our estimate indicates an 11.7% year-over-year increase in the company's interest expenses. Shares of Prologis have declined 6.2% over the past three months, underperforming the industry 's fall of 1.2%. Stocks to Consider Some better-ranked stocks from the REIT sector are VICI Properties VICI and W.P. Carey WPC,each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. The Zacks Consensus Estimate for VICI Properties' 2025 FFO per share is pegged at $2.34, up 3.54% year over year. The Zacks Consensus Estimate for W.P. Carey's2025 FFO per share is pegged at $4.88, up 3.83% year over year. Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs. Only $1 to See All Zacks' Buys and Sells We're not kidding. Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent. Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators, and more, that closed 256 positions with double- and triple-digit gains in 2024 alone. See Stocks Now >> Prologis, Inc. (PLD): Free Stock Analysis Report W.P. Carey Inc. (WPC): Free Stock Analysis Report VICI Properties Inc. (VICI): Free Stock Analysis Report
Globe and Mail
08-05-2025
- Business
- Globe and Mail
Sustainable dividends from cell-tower providers poised for growth
What are we looking for? Sustainable dividends from cell-tower providers poised for growth. The screen Telus Corp. T-T is exploring a possible sale of 49.5 per cent of its cell-tower network in an effort to pay down debt. That stake could attract as much as $1-billion, while keeping Telus in control of a network with some 3,000 towers spread across key markets. Like Telus, all tower companies own and operate the physical structures, themselves, but it falls to the mobile network operators that lease space on those structures to install and maintain their broadcast equipment. As our TSI analysts point out, the arrangement makes for a diversity of customers leasing space on any given tower. Our search started with dividend-paying cell-tower operators. From there, we focused on established players well positioned for cash-flow growth as demand rises and the industry's high barriers to entry keep out new competitors. From there, we applied our TSI Dividend Sustainability Rating System, awarding points to a stock based on key factors: Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above average sustainability; average sustainability, four to six points; and below average sustainability, one to three points. More about TSI Network TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor, and the TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management. What we found Our TSI Dividend Sustainability Rating System generated five stocks. American Tower Corp. AMT-N, based in Boston, is the largest independent operator of wireless telecom and broadcast towers, with more than 149,000 sites worldwide. Headquartered in Houston, Tex., Crown Castle Inc. CCI-N owns and operates more than 40,000 cell towers throughout the U.S. Not that the company is planning to sell its fibre business and will cut its dividend by 32.1 per cent later this year to reflect the loss of those assets. SBA Communications Corp., SBAC-Q based in Boca Raton, Fla., owns and operates towers, principally in the U.S., but also South America, Central America, Canada and Africa; all together, that's almost 40,000 towers. DigitalBridge Group Inc., DBRG-N also headquartered in Boca Raton, is a global digital infrastructure investment firm. The company owns, invests in and operates businesses such as cell towers and data centres. These interests include Vertical Bridge, with more than 17,000 towers. And finally, Vancouver's Telus continues to profit from selling telecom services to Canadians. The unlocking of value with the sale of the cell-tower stake, combined with Telus's move to retain controlling interest, will further support its high dividend. We advise investors to do additional research on investments we identify here. Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.
