VICI(VICI) The Motley Fool·2025-02-14 09:15Core Viewpoint - Vici Properties is a real estate investment trust (REIT) focused on leasing casino properties, offering a high dividend yield of 5.7% supported by consistent dividend growth, making it an attractive option for dividend growth investors [1][10]. Company Overview - Vici Properties operates as a net lease REIT, primarily owning casino properties that include gambling facilities, hotels, restaurants, and retail spaces [2]. - The REIT generates approximately 98% of its rent revenue from casino properties, indicating a concentrated business model [3]. Economic Sensitivity - The casino industry is economically sensitive, and while gambling has shown resilience, recessions can pose challenges for casino operators and their landlords [4]. - Despite economic downturns, Vici Properties has maintained its dividend growth, demonstrating the strength of its business model [4][5]. Dividend Growth Potential - Vici Properties has consistently raised its dividend since going public in 2018, aided by built-in rent hikes in its leases and an average remaining lease term of 41 years, which is significantly above the typical average for net lease REITs [6]. - The REIT's long lease terms provide a solid foundation for continued dividend growth [6]. Growth Opportunities - While growth potential within the casino sector may be limited, Vici Properties is exploring modest acquisition activities and capital investments in existing properties, as well as diversifying into non-casino businesses [7]. - Current non-casino ventures include bowling alleys and a gym complex, which together account for less than 2% of total rents [7]. Investment Considerations - Vici Properties presents an attractive investment opportunity with a high dividend yield and solid prospects for growth, especially as the stock trades down approximately 12.4% from its 52-week high [8]. - However, the concentration on a single type of tenant, with two tenants accounting for 74% of rents, may deter conservative investors [10].