I'm Persistently Drawn to Purchasing this Dividend Stock Offering Almost 6% Returns
Cranking up the passive income game is essential for my investment strategy. My aim is to hit a point where our family's regular expenses get covered by this passive income source, giving us more financial and time flexibility.
My go-to strategy involves investing in high-yielding dividend stocks that consistently up their payouts. A recent addition to my portfolio is Vici Properties (VICI), a real estate investment trust (REIT), which I've added to three times within the past two months. I predict I'll still be adding more shares in the near future.
Vici Properties' dividend yield is a smart bet with low risk
Vici Properties currently boasts an impressive dividend yield of over 5.9%, well above the S&P 500's 1.2%. The high-yielding payout stems from a strong foundation – the stability of its rental income, thanks to its top-notch real estate portfolio. Vici Properties owns 54 gaming properties and 39 other experiential properties across the U.S. and Canada, operating under long-term agreements.
Vici Properties pays out around 75% of its Adjusted Funds from Operations (FFO) in dividends, maintaining a substantial cushion while still retaining funds for new investments. Its investment-grade balance sheet adds to its financial flexibility, making it a low-risk choice somehow.
Room to grow and thrive
Vici Properties has a proven track record of annual dividend increases since its IPO, reaching seven in a row. In 2022, it raised the payout by 4.2%, and since its launch, it's grown its dividend at a 7% annual rate, outperforming other REITs.
Two major growth drivers are rental increases and acquisitions. About 40% of its leases currently escalate rents inline with inflation. This percentage is projected to increase to 90% by 2035, meaning rental increases will rise at a low-single-digit rate yearly. Acquisitions are another key driver, enabling Vici Properties to grow into the world's top gaming and experiential REIT.
Unlocking new growth opportunities
Vici Properties has option agreements or the right of first refusal to purchase several gaming properties from current tenants. Acquiring properties from new operators also remains an option. Additionally, the REIT has long-term financing partnerships with developers of experiential properties, allowing it to acquire new assets in the future.
Securing capital for its tenants to fund property improvements is another growth strategy. Last year, Vici Properties provided The Venetian Resort Las Vegas with $700 million, which will be recouped with a higher rental rate on the property.
In conclusion, Vici Properties offers an appealing high-yield divide, powered by steady growth and a recent stock price drop. With its acquisitions and expansion plans, it's a low-risk and attractive option for investors seeking passive income growth.
I agreed to invest more in Vici Properties due to its high dividend yield and low risk profile. With a current yield of over 5.9%, Vici Properties pays out around 75% of its Adjusted Funds from Operations in dividends, while maintaining a substantial cushion for new investments.
The compounding growth of Vici Properties' dividend yield is another appealing factor. It has increased its dividend annually since its IPO, reaching seven consecutive increases, and even outperformed other REITs with a 7% annual growth rate.
Moreover, Vici Properties' growth strategies such as rental increases and acquisitions, as well as partnerships with developers, provide ample opportunities for further income growth. For instance, its option agreements to purchase several gaming properties and its provision of capital for property improvements contribute to its steady expansion.
Investing in Vici Properties aligns well with my strategy of generating passive income with low risk. Its consistent dividend payouts, coupled with the potential for further yield increases and growth, make it an attractive addition to my investment portfolio.
