purchasing Vici Properties stock urgently for these 4 compelling reasons

Four Strong Motives to Invest in Vici Properties Shares Without Delay

Vici Properties (VICI, 0.13%), a real estate investment trust (REIT) that manages casinos and entertainment venues in the United States and Canada, is often seen as a stable dividend investment. In the past five years, its shares have surged by almost 30%, pushing its total return up to near 70%.

Some investors might be hesitant to invest in Vici given its close proximity to its all-time high, but I believe it still presents a strong buying opportunity for four key reasons.

1. REITs gain more appeal as interest rates decrease

REITs acquire numerous real estate properties, rent them out, and then share the rental income with their investors. To uphold a favorable tax rate, they must distribute at least 90% of their pre-tax earnings to their investors as dividends. This is why several REITs have high dividends. Vici currently offers a forward dividend yield of 5.5%, in contrast to the 10-Year Treasury's yield of 4.4%.

Over the past two years, many REITs experienced challenges due to rising interest rates that made it tougher for buying new properties, produced more difficulties for their tenants, and diverted yield-seeking investors towards risk-free CDs and T-bills. However, as interest rates decrease, these challenges should abate, and the bulls should return.

2. Vici boasts a sturdy and diverse portfolio

Vici controls 93 properties in the United States and Canada. Its primary tenants include Caesar's Entertainment, MGM Resorts, Penn Entertainment, and Century Casinos. Various top Las Vegas casino resorts, such as Caesars Palace, MGM Grand, and the Venetian, are leased by Vici.

Vici's extensive involvement with the gaming sector could seem risky, but casinos typically fare well during recessions. By locking its tenants into long-term contracts and the intricate real estate regulations that govern the gaming industry, Vici possesses a moat that hinders its tenants from relocating their businesses.

That's why Vici has maintained a 100% occupancy rate since its initial public offering in 2018 - even when the COVID-19 pandemic impacted the travel, hospitality, and casino gaming industries. Most of its long-term leases are tied to the consumer price index (CPI), allowing it to steadily increase rent to match inflation. This makes it more resistant to inflationary pressures than other REITs that do not provide CPI-linked leases. To top it off, Vici is a triple net lease REIT, which means its tenants are responsible for paying all property taxes, insurance costs, and maintenance fees.

3. Vici boasts steady earnings growth and an affordable valuation

REITs' value is seldom determined by earnings per share (EPS), as they continuously issue shares for real estate investments. Instead, their growth is measured by funds from operations (FFO), or the cash generated by their core operations, excluding any gains or losses from property sales.

From 2018 to 2023, Vici's adjusted FFO increased at an annual compound growth rate (CAGR) of 8.5%. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), which cuts through a lot of noise, increased at a CAGR of 32%.

At $32 per share and an enterprise value of $50.7 billion, Vici still appears undervalued at 15 times last year's FFO per share and 17 times its adjusted EBITDA. Realty Income, one of the world's largest REITs, is trading at 14 times last year's FFO per share.

4. Vici Properties provides stable dividend growth

Vici has boosted its dividend annually since its market debut six years ago. It has pledged to distribute at least 75% of its FFO to its investors as dividends. This sizeable dividend becomes even more appealing to income investors as interest rates decline.

Vici Properties is an exceptional buying choice for income investors

Vici is not a high-growth stock, but it offers an excellent investment opportunity for income-focused investors seeking consistent long-term returns. Therefore, I believe it's prudent to accumulate shares in this stock before the Fed reduces interest rates once more and inspires more investors to return to REITs.

In light of potential interest rate decreases, investing in Vici Properties could be advantageous due to its high dividend yield compared to the 10-Year Treasury's yield, making it a viable option for income-seeking investors in the finance market.
For those interested in investing in the sector, Vici Properties' diverse portfolio of properties and long-term leases, coupled with its status as a triple net lease REIT, provide a stable source of income, making it an attractive choice in the realm of money management.