Vici Properties: Three Strong Reasons to Consider for Long-Term Investment Opportunities
If you're less enamored with the thrill of the gamble and more into long-term investments, the short-lived thrill of gambling might not tickle your fancy. But that doesn't mean the world of gambling is void of interest for you. In fact, it's a massive industry with a hefty focus on providing access to individuals who enjoy a spin of the wheel or a roll of the dice.
One such accessible hub for gamblers is none other than Las Vegas. Home to numerous casinos and just shy of half of Vici Properties' (VICI -0.15%) casino properties, this city is a mecca for gambling enthusiasts. Vici Properties, an esteemed real estate investment trust (REIT), benefits from the enduring popularity of gambling, making for a rather rewarding investment opportunity for both the company and its investors.
Three reasons why long-term investors should check out Vici Properties:
1. It's all about location, location, location
Let's break things down – Vici Properties is not in the gambling business itself, but rather, it specializes in owning casino properties. While the casino industry can be cyclical, oscillating with the broader economy, the buildings that house these casinos remain robust, given the regulatory barriers that come with opening and operating a casino.
When a casino finds success, its property value skyrockets, regardless of the status of the casino business. Since Vici Properties owns these highly valuable properties, it essentially reaps the rewards. And closing down a casino only to see a brand-new one emerge in the same location is merely par for the course.
The importance of casino properties was solidified during the COVID-19 pandemic. Although casinos shut down temporarily during those uncertain times, tenants remained dedicated to paying their rent, with Vici Properties even increasing its dividend. The resilience of Vici's business and its dependable income opportunities are a sound alternative for investors who would rather steer clear of the volatile casino operators.
2. Swell dividends ahead
Out of all the stocks in the S&P 500 indice, Vici Properties boasts one of the most attractive dividend yields, setting itself apart with a yield of approximately 5.5%. That's considerably higher than the 1.2% yield you'd typically find with stocks in the S&P 500 and the 3.8% you'd find with REITs.
What's more surprising is that the company's dividend even increased during the COVID-19 pandemic, further confirming its financial strength and commitment to its stakeholders.
When it comes to dividends, Vici Properties manages to spare no expense. The adjusted funds from operations (FFO) payout ratio stood solidly at 75% in the fourth quarter of 2024, thanks to its net lease approach.
To top it off, Moody's even upgraded Vici Properties' balance sheet, nudging it from below investment grade to investment grade, reducing its debt-related costs.
3. Dividends that prosper
With Vici Properties owning the most desirable assets in a cyclical yet loyal-customer-driven business, it's safe to say that long-term investors stand a chance of receiving a continually growing dividend stream.
While it's difficult to find substantial growth through acquisitions in the already-established casino sector, Vici is making strides by diversifying its portfolio beyond gambling. This strategic expansion involves providing loans for construction projects, with the aim of eventually acquiring those new properties down the line.
Moreover, 90% of Vici Properties' leases come with inflation-linked rents, guaranteeing steady revenue growth for the company. Any future acquisitions will only serve to bolster that growth even further.
Is Vici Properties your new flavor of the month?
If you're an investor who appreciates a high-yield and dependable dividend, then Vici Properties might be the REIT that tickles your fancy. Its ability to generate income for years to come, even in a cyclical industry, makes it an attractive option for those with a hint of risk-tolerance.
However, some might find the company's heavy focus on the gambling sector to be a factor that sets a red flag. Nonetheless, the generous dividend yield might be incentive enough for those not wary of a slight flutter with the casino industry.
- Despite Vici Properties not directly participating in the gambling industry, it specializes in owning casino properties, benefiting from the enduring popularity of gambling and making it an appealing investment opportunity for investors looking for a stable income source.
- If you're an average investor seeking a high-yield dividend, Vici Properties could be of interest due to its impressive 5.5% dividend yield, which is significantly higher than the average S&P 500 and REIT yields.
- In addition to its focus on casino properties, Vici Properties is diversifying its portfolio by providing loans for construction projects, aiming to eventually acquire new properties and increase its revenue growth.
- The benefits of investing in Vici Properties extend beyond its casino properties, as 90% of its leases include inflation-linked rents, ensuring steady revenue growth and protecting investors from potential market fluctuations.
