Prologis and Union Pacific power the arteries of commerce. Prologis (NYSE: PLD) owns and leases the warehouses and distribution centers that keep e-commerce humming, while Union Pacific (NYSE: UNP) operates the rails that haul those goods across the U.S. heartland. Both benefit from long-term shifts like e-commerce growth, manufacturing revival, and infrastructure reinvestment. But for investors looking for a blend of income and long-term tailwinds, Prologis may offer the stronger case. Here's why.

Image source: Getty Images.

Prologis: real estate on a roll

Prologis is a behemoth of a real estate investment trust (REIT). To give you an idea of its scale: The $2.7 trillion in goods that flow through its properties each year would make Prologis the eighth-largest economy in the world, and its warehouse footprint (1.3 billion square feet ) is enough to cover the equivalent of two Manhattans. By contrast, STAG Industrial – a notable peer – owns just 117.6 million square feet.

Many of Prologis' warehouses sit in the right places: near major metro areas, close to highways, ports, dense population centers. These locations are ideal for same- and next-day delivery, which is why many blue-chip giants -- like Amazon, Home Depot, and FedEx -- have lease agreements with it.

A look at Prologis' most recent earnings underscores the powerful moat the company is digging. In Q1 2025, it signed 58 million square feet of new leases (up from 48 million in Q1 2024) and broke ground on $650 million in new developments (up from $273 million last year). About 78% of these were build-to-suits, meaning the leases were pre-signed before construction even began. That's well above the industry's 25% build-to-suit average, according to JLL . This sharply lowers the risk of vacancy, which matters when a single large 500,000-square-foot warehouse can cost about $40 million to build.

New lease expansion is matched by growth in the actual cash generated from its core operations as measured through funds from operations (FFO), which rose 10.9% in Q1 . That bump came from strong tenant retention and rising rents. Those same dynamics pushed net operating income up 6.2 %, which shows that Prologis is extracting more value from every square foot it owns. These are strong results for any REIT -- and even more impressive at this scale. As the chart below shows, Prologis' operating revenue is several times higher than even its closest peers.

To underscore the opportunity, just follow the numbers. E-commerce currently makes up about 24% of U.S. retail sales (excluding autos and gas) and is set to climb past 30% by 2030 . Each percentage point increase will demand roughly 60 to 70 million square feet of new warehouse space -- more than 18% of Prologis' existing U.S. footprint.

That's a lot of new space, but here's where it gets interesting: Prologis already owns enough undeveloped land to underwrite $41.2 billion of future warehouse builds. When demand justifies new ground-up constructions, then, management can tap into this immense war chest. With that, Prologis has everything in place -- the land, the leases, the balance sheet -- to be the infrastructure backbone of online retail.

Union Pacific: the steady iron horse

Like Prologis, Union Pacific is a logistics giant. Instead of warehouses, however, its real estate is 32,693 miles of track, and instead of rent checks, it makes money hauling freight, like coal, grain, and cars. Both companies would profit from an e-commerce boom, yet when it comes to growth, Union Pacific doesn't have nearly as much upside.

Part of the reason is the inherent constraints of Union Pacific's railroad business. Unlike Prologis, which can buy land in untapped markets, Union Pacific spends most of its capital keeping existing tracks in shape instead of the costly slog of laying new rails. Rather than expanding its footprint, Union Pacific must drive growth through efficiency, like sharper pricing power and squeezing additional volume from its existing network.

Which, to be sure, is what Union Pacific is doing. Under CEO Jim Vena, who took the reins in August 2023, Union Pacific has tightened operations, broadened margins, and delivered goods with precision. In its latest quarter, a rebound in intermodal and bulk cargo -- paired with solid pricing discipline and tight cost controls -- helped Union Pacific keep its efficiency steady, boost carload revenue by 7%, and crank out $2.2 billion in cash.

Unlike Prologis, however, Union Pacific's growth is tied to broad freight cycles and a network nearing capacity. This leaves it with fewer levers for major long-term upside despite operational excellence.

That said, Union Pacific does have an attractive price right now. Tariff news has mostly spooked investors, even as the company's fundamentals remains solid. Granted, tariffs could dent Union Pacific's revenue, yet the company's no spring chicken. In its 163-year history, it has weathered two World Wars, a Great Depression, and every market storm in between. For value seekers, then, this sell-off could present a rare chance to grab a proven workhorse at a discount before the market realizes the engine is still humming strong.

So, which is the better buy?

Both companies sit at the heart of American's logistics grid, yet Prologis holds the edge. Not only is it adding warehouse space today, but it owns the land to fuel e-commerce's next big boom. It also throws off an attractive 3.8% dividend – eclipsing Union Pacific's 2.4% -- so you're getting yield and upside in one package. For investors hunting both dividend and growth, then, Prologis fits the bill.