Each week on Industry Focus: Financials, host Jason Moser and Fool.com contributor Matt Frankel, CFP each share a stock that's on the top of their watchlist. This week, both of their picks were plays on the gaming industry. Hear why Moser is looking at Churchill Downs (NASDAQ:CHDN), which is so much more than the famous racetrack that bears its name, while Frankel wants to play gaming through real estate with MGM Growth Properties (NYSE:MGP).
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This video was recorded on Sept. 16, 2019.
Jason Moser: Alright, Matt, last segment for the day. Talking One to Watch here, as always. What is your stock for our listeners to watch this week?
Matt Frankel: Continuing our real estate and Millionacres theme, I am going to recommend another REIT, but this one's a really cool and unique one. It's called MGM Growth Properties, ticker MGP. This is the company that owns a lot of the casinos that bear the MGM brand name. Anyone in the D.C. area knows the MGM National Harbor, which is right near where Jason is right now. I don't know if you've been to that one, but it's a pretty impressive property. I think The Fool actually had an event there not too long ago. They own the Borgata in Atlantic City, which is where I had my 21st birthday way back in the day. They own seven of the MGM casinos in Vegas.
I love this as a play on the legalization of gambling that's spreading throughout the country. The stock yields a little over 6% right now, so it's a great dividend stock. It's got, like I said, irreplaceable assets, which is one thing I really look for when I'm looking for a real estate investment. It's got a natural acquisition pipeline. As MGM builds more casinos, they sell them to their real estate investment trust that bears their name. They have a bunch of advantages. They can see the unit-level financials of their tenants, which is very unique in real estate. They've been able to grow their dividend really impressively in their short history since they became a public company. I just really love this as a great dividend play to hold onto for the long run.
Moser: OK, nice! I'm a little bit in line with you, I suppose. The stock that was on my radar for last week's Motley Fool Money, I'm putting it as my One to Watch this week as well, is Churchill Downs, ticker CHDN. Matt, I don't know if you knew this -- the Kentucky Derby is the longest continuously held annual sporting event in the United States. With that said, Churchill Downs is far more than just the Kentucky Derby company. It actually operates casinos and other tracks and online gambling sites, including TwinSpires, which is the largest legal online horse racing platform in the U.S. Of the three major revenue buckets in racing, online wagering, and casinos, right now, it's casinos that are the big moneymaker for the company. But, all three play a nice important role. As you mentioned, we continue to see this regulatory landscape evolve in the U.S. as gambling becomes legal in more places. I think Churchill Downs certainly could be in a very good position to benefit from that, given their experience in the space. So, one I have been digging into, and I'm liking what I'm seeing. There you go!