A core aspect of my investing strategy is buying stocks with attractive and growing dividends. I aim to generate enough passive income from dividends and other sources to eventually cover my expenses. While I have a long way to go, I'm steadily making progress as I make new income-focused investments and those companies increase their payouts.

VICI Properties (VICI 0.33%) is one of my latest buys. Here's why I'm boosting my bet on this experiential real estate owner.

Getting bigger and better

Last year was a transformational one for VICI Properties. The REIT completed its acquisition of rival gaming REIT MGM Growth properties for $17.2 billion. It also bought the Venetian Resort Las Vegas for $4 billion. Those deals made it the largest real estate owner on the Las Vegas Strip.

On top of all that, the company made several other acquisitions and investments to expand its casino portfolio and diversify into non-gaming properties. Notable investments in other experiential real estate property classes included:

  • Destination golf experience: VICI provided funding to Cabot to finance several new additions to its Citrus Farms property that the REIT will eventually acquire and lease back to Cabot. 
  • Indoor waterpark resorts: VICI has funded several new Great Wolf Resorts developments. 
  • Place-based wellness: The REIT provided funding to develop Canyon Ranch's latest wellness resort in Texas. 

These deals drove substantial revenue and cash flow growth for VICI Properties. The REIT's revenue rocketed 72% for the year. Meanwhile, its adjusted funds from operations (FFO) leaped 61.7% overall and by 6.1% on a per-share basis after accounting for the increase in outstanding shares to fund the MGM deal and its other acquisitions. 

This growth allowed VICI to boost its dividend by another 8.3%. It has now given investors a raise in all five years since its initial public offering. 

Lots more growth ahead

VICI Properties' shopping spree gives it a lot of momentum in 2023, when it should realize the full benefit of last year's deals. The company expects its adjusted FFO to grow to a range of $2.10-$2.13 per share. This forecast implies that adjusted FFO will increase by about 10% per share at the midpoint of its guidance range. That should enable the REIT to continue growing its dividend. It currently pays $0.39 per quarter ($1.56 annualized), giving it a dividend payout ratio of less than 73.5%, which is below its 75% target. At the current stock price, VICI Properties has a very attractive yield of 4.8%, a lot higher than the S&P 500's 1.7% yield.

VICI Properties should be able to continue growing its adjusted FFO and dividend in the coming years. Several factors drive that view. A big one is embedded growth. VICI Properties signs very long-term leases with tenants, many of which feature annual lease escalation rates tied to inflation. About half of its lease will benefit from inflation this year, which will expand to 96% by 2035. The company also has the right to acquire several properties from existing partners, including new developments it has helped finance.

Meanwhile, VICI has multiple external growth drivers. It can continue acquiring gaming and non-gaming properties from new and existing partners, provide existing tenants with funding to expand their properties, and finance new experiential property developments. The company has lots of financial flexibility to capitalize on opportunities. It retains substantial cash after paying the dividend and has an investment-grade rated balance sheet.

A low-risk gamble

VICI Properties offers a high-yielding dividend supported by a superior portfolio and strong balance sheet. The company has the financial flexibility and opportunity set to continue increasing its dividend. My growing wager on the stock has a high probability of continuing to pay off for my income investment strategy.