🎰 VICI Properties: Quality REIT with a 6% dividend $VICI
If we look at the real estate sector, VICI Properties is among the most interesting companies you can find in the US. For those who don’t know the firm, it’s a REIT that owns the land and buildings of the most famous casinos in Las Vegas, such as Caesars Palace, MGM Grand, and The Venetian. It’s important to understand that VICI does not operate gambling and doesn’t risk money at the gaming tables. It acts as an owner that leases premises long-term to large operators and essentially just collects rent reliably.
However, the current market situation is not exactly favorable for real estate funds. The main reason is high interest rates, which generally make financing new purchases and debt more expensive for REITs. Additionally, when rates are high, investors often flee dividend stocks to government bonds that offer a similar yield with almost no risk. Given the current tensions in Iran and across the Middle East, we can’t expect rates to fall soon. Oil prices remain elevated, which keeps inflation "sticky" and gives central banks little reason to loosen monetary policy. And I personally think this environment will stay with us at least through this year.
Despite these macroeconomic pressures, VICI has one big advantage: the quality of their lease agreements. These are the so-called "triple-net leases," where the tenant pays not only rent but also all taxes, insurance and maintenance. Moreover, their contracts are structured so they are partially protected against inflation, so the company’s revenues naturally grow with rising prices. Looking at the chart, it’s also visible that the stock is currently at a fairly strong support. The trend of how the price has developed in recent years and bounces off certain levels is quite clear and stable.
From my point of view, this is a great long-term opportunity to add a quality REIT with a nice dividend to a portfolio.
I don’t currently own any other REIT companies, but as additional "anchors" of my portfolio I also have $BRK-B and $WM.
What about you? Do you own any REITs?
I sold the shares of these companies some time ago and moved the money into growth stocks. However, if interest rates continue to fall, those REITs could see solid growth.
REITs don't interest me because their performance has been weak over the long term — just look at the chart for the past five years. The dividend is nice, but it doesn't beat the S&P 500.
For example, shares like $O have climbed nicely since the start of the year, so I'm a bit surprised that $VICI hasn't risen too. Do you know why the stock plunged so much on Friday?