Adding $500 to these 2 stocks would be a cool move right now

Market sell-offs are usually a good time to add to existing positions. You already know stocks well, and now you can buy even more shares of a high-conviction investment at a better value.

black stone (B-X) 3.43%) Y Foreword (PLD 3.37%) they have had great successes during the current bear market, although they are doing well. So a smart move at this point would be to add around $500 to your investment if you already own stocks (or are considering adding them to your portfolio). That small investment could pay big dividends down the road as these companies continue to grow their profits and their share prices recover.

Significant revenue and growth potential

Blackstone shares are down around 40% since the start of 2022. That’s despite a fantastic year from the world’s leading alternative asset manager.

The company has increased its assets under management (AUM) by 30% over the past year to more than $950 billion. That has fueled strong growth in fee-related earnings, which have skyrocketed 50% over the past year to more than $3.3 billion. Meanwhile, total distributable earnings (fee-related earnings and net performance income) have risen 36% to nearly $5.3 billion.

Blackstone’s AUM, fee-related earnings and distributable earnings should continue to grow. investors are allocating more and more of their portfolios to alternative investments and must continue. Preqin expects the global alternative investment market to grow at an annual rate of approximately 12%, nearly doubling over the next five years to $18.3 trillion. As the world leader in alternatives, Blackstone should capture an outsized share of this growth, especially given its reputation as a top brand.

That should allow the company to continue increasing its sizeable dividend. Blackstone paid $4.94 per share last year, giving it 6.5% dividend yield at its recent share price. Add that dividend income to the company’s growth potential and Blackstone could produce market-smashing total returns for years to come as its shares recover from their 2022 slump.

Significant built-in growth potential

Prologis shares have lost more than a third of their value since their peak early last year. That sharp decline occurred despite the fact that the main industrial REIT continues to benefit from the almost insatiable demand for storage space.

Occupancy across the company’s portfolio held near an all-time high of 97.7% in the third quarter. With limited vacancies in its markets, rental rates soared 59.7% in the period as existing leases expired and it signed new ones at market rates. These factors helped drive record growth in same store net operating income (SSNOI) at 9.3%.

Prologis is only capturing a portion of the recent increase in rental rates due to the long-term nature of its leases. Therefore, the company expects SSNOI to grow at an annual rate of 8% to 10% over the next several years. That’s assuming no further growth in rents, which seems unlikely given continued strong demand for storage space amid tight supplies.

Additionally, Prologis recently acquired its closest rival, Duke Realty, in a $26 billion deal. It expects the purchase to immediately increase its earnings per share while driving incremental revenue growth in the coming years as it captures merger synergies. The company also has an extensive development pipeline to drive additional growth as new storage capacity comes online.

These growth catalysts should allow Prologis to continue to increase its dividend with a yield of 2.8%. The company has increased its pay at an annual rate of 12% for the past five years, double the rate of S&P 500 and other REITs. That combination of revenue and growth positions Prologis to produce strong total returns in the coming years, especially from its lower valuation.

High probability of obtaining high returns

Blackstone and Prologis shares have been under a lot of pressure over the past year, even though their businesses are thriving. Because of that, both companies should be able to continue to grow their earnings and dividends at healthy rates, which should allow them to produce strong total returns, especially as their share prices recover. That highly likely upside potential makes them seem like wise stocks to add at this point.

Mateo Di Lallo has positions in Blackstone and Prologis. The Motley Fool has positions and recommends Blackstone and Prologis. The Motley Fool has a disclosure policy.

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