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Dividend Hike at Prologis

Zacks Equity Research

Ushering in good news for its shareholders, industrial real estate investment trust (:REIT) Prologis Inc. (PLD) announced an 18% increase in its quarterly dividend rate. The company will now pay a dividend of 33 cents per share on its common stock, compared with 28 cents paid in the prior quarter. The increased dividend will be paid on Mar 31, 2014 to stockholders of record on Mar 12.

Shares gained 11 cents during the regular trading session on the NYSE yesterday. The new dividend rate results in an annualized yield of 3.2% based on the company’s closing price of $41.02 on Feb 26.

Going forward, we believe that amid a larger customer base, rise in e-Commerce application and supply chain consolidation, demand for Class-A facilities will continue to rise.

However, new supply is low and in this environment Prologis stands to benefit since it has the capacity to offer modern distribution facilities in strategic infill locations. The company is currently capitalizing on such growth opportunities across the globe.

In fact, efficiencies from enhanced scale, development initiatives and recovering rents set the ground for growth for this REIT. The company also came up with better-than-expected results in fourth-quarter 2013.

A number of REIT stocks have also raised their dividend in recent times. Among them are Simon Property Group Inc. (SPG), Avalonbay Communities Inc. (AVB) and Apartment Investment and Management Company (AIV) (better known as Aimco).

Concurrent with its earnings release, Simon Property increased its quarterly dividend by nearly 4.17% to $1.25 per share from $1.20 paid in the prior quarter. AvalonBay enhanced its quarterly dividend rate by 8.4% to $1.16 per share from $1.07 per share while Aimco announced an 8.3% hike in its quarterly dividend rate to 26 cents per share from 24 cents paid in the prior quarter.

Solid dividend payouts are arguably the biggest attraction for REIT investors as the U.S. law requires these companies to distribute 90% of their annual taxable income in the form of dividends to shareholders.

Prologis currently carries a Zacks Rank #3 (Hold).

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