Picking today's hot stocks and expecting them to quickly rise is not a particularly reliable way to build real wealth for a secure retirement.
But choose well, and you can go a long way toward achieving that goal -- especially if your choices are companies with the past performance and strong future prospects.
Two such equities to consider are Prologis(NYSE: PLD) and Equinix(NASDAQ: EQIX). They're both undisputed leaders in industries notable for their growth trajectory. Prologis is the largest owner of logistics space on the planet and Equinix operates data centers on a global scale.
They're also both real estate investment trusts (REITs), notable for their stability and dividend income. REITs are required by tax law to pay out at least 90% of their taxable income as dividends. Invest in them and you can choose to either use that cash as it flows in or reinvest it and see the total return grow.
Looking back and forward, say 15 years
Plans for retirement are as varied as the people who make them. For this instance, let's say you're 50 with about 15 years to go. Then let's look back 15 years, which would take us to the depths of the Great Recession.
Here's how Prologis, Equinix, and the Vanguard S&P 500 Index ETF, a benchmark exchange-traded fund, have performed since January 2009, shown in terms of what a $1,000 investment would be worth now if dividends were reinvested (total return) and if they were not (price growth).
PLD Total Return Level data by YCharts
Now, here's a look at each of these industry leaders and a thought or two on why they might continue to be outperformers.
Prologis is a titan of e-commerce fulfillment
Prologis boasts that it sees the equivalent of about 3% of the world's gross domestic product flow through its facilities, a collection about 1.2 billion feet of logistic space used to serve more than 6,700 customers in 19 countries around the world.
Prologis adds value to its vast warehouse space by providing tenants with turnkey, integrated solutions that take advantage of advancing technologies in material handling. There's also a lot happening atop those facilities. Prologis now boasts being the second-largest onsite producer of solar power in the U.S.
Prologis tenants -- led by mega-shippers such as Amazon and FedEx -- can be expected to keep vacancy rates for this industrial REIT at or near record lows as global e-commerce revenue continues to grow at a forecast annual rate of 8% for the next several years.
Equinix helps form the growing cloud
Like Prologis in the physical realm of cardboard and forklifts, Equinix holds a dominant spot in the virtual world of the digital economy, with a network of some 250 connected sites on six continents.
Cloud computing giants such as Alphabet, Microsoft, and Zoom are among more than 10,000 customers who depend on Equinix to store their data and keep it moving.
With the ever-increasing need for data storage and interconnectivity, Equinix's strategic positioning across multiple markets around the globe, along with its proven ability to scale and innovate, position this REIT for continued relevance and growth.
Rallying with the rest of them, on to retirement
The greater market, of course, is rallying right now but these two trusts have been even hotter over the past few months, as shown in the chart above.
Both have also consistently increased their dividends, with 10 straight years of pay bumps for Prologis and eight for Equinix. (They're currently yielding about 2.7% and 2.1%, respectively.)
Past performance, whether in the short term or over the long run, is no guarantee of future results. But Prologis and Equinix seem to have the products, services, savvy, and steam to remain dominant in their sectors for years to come, making them both buy-and-hold stocks for a retirement portfolio.
Should you invest $1,000 in Prologis right now?
Before you buy stock in Prologis, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Prologis wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of December 18, 2023
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Marc Rapport has positions in Alphabet, Amazon, and Prologis. The Motley Fool has positions in and recommends Alphabet, Amazon, Equinix, FedEx, Microsoft, Prologis, Vanguard S&P 500 ETF, and Zoom Video Communications. The Motley Fool has a disclosure policy.
