The United States has taken an aggressive stand with regard to tariffs. The current approach is so far removed from the recent historical norm that global trade is in a state of flux. A new normal will likely be reached at some point, however, which could make the concerns swirling around Prologis (NYSE: PLD) a good buying opportunity for investors who like to buy stocks and hold them forever. Here’s what you need to know.
It’s getting ugly on the trade front
The huge tariffs being imposed by the United States on its trade partners were well telegraphed by the current administration. But given the scale and scope of the tariffs, the world has been thrown into a tailspin. While the biggest “fight” appears to be between the United States and China, no country is likely to be spared from at least some pain as the current tariff uncertainty plays out.
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Which is why warehouse owner Prologis has seen its shares fall by around 15% from their 52-week highs. That drop makes complete sense, however, since Prologis’ portfolio spans the globe. With buildings in North America, South America, Asia, and Europe, this real estate investment trust (REIT) has a footprint in virtually all of the most important trade hubs in the world.
The company’s footprint isn’t just wide; it is also deep. With 5,900 buildings containing 1.3 billion square feet of space across 20 countries, Prologis is gigantic. In fact, its $100 billion market cap makes it one of the largest publicly traded REITs an investor can buy. It is the 800-pound gorilla in the warehouse sector.
This too shall pass for Prologis
The concerns on Wall Street today, however, aren’t really about Prologis’ business, per se. They are more about international trade, which is currently in a state of flux. That will have an impact on Prologis. Prologis is really just collateral damage as uncertain investors run for cover. The stock drop, meanwhile, has pushed the REIT’s dividend yield up to almost 3.7%, which is near the high end of its 10-year yield range.
That historically attractive yield suggests that this is a buying opportunity for buy-and-hold investors who favor dividend stocks. But there’s one more number to consider here, and that is the huge 10% average annualized dividend growth that Prologis has put up over the past decade. So, this isn’t just a value story — it is a dividend growth story, too.
Some fear may be warranted since there’s no way to tell what the future holds. However, it seems likely that international trade isn’t going to end, considering the recent cooling in the rhetoric between China and the United States. And, given Prologis’ broadly diversified portfolio, it will likely be a sizable player in whatever new trade relationships emerge. The fact that Prologis has an investment-grade-rated balance sheet, meanwhile, suggests that it has the financial leeway to deal with any near-term headwinds it may face.
Prologis has a one-of-a-kind portfolio
It would be very difficult to replicate the business Prologis has created. The company’s size and reach are currently seen as something of a headwind, but it is really a long-term tailwind. If you can stomach buying while others are selling, which requires a contrarian approach, this magnificent warehouse REIT could be an opportunistic addition to your portfolio while it is down 15% from its 52-week highs.
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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Prologis. The Motley Fool recommends the following options: long January 2026 $90 calls on Prologis. The Motley Fool has a disclosure policy.
