In 2022 and 2023, rising interest rates drove many income investors to sell their dividend stocks and buy risk-free CDs and T-bills for higher yields. But as interest rates decline again, many of those investors will rotate back toward blue chip dividend stocks.
Yet investors shouldn't simply chase the highest yields, which might be unsustainable or inflated by declining stock prices. Instead, they should invest in companies with wide moats, stable profits, and reasonable payout ratios. Let's review two surefire dividend plays which check all three boxes: AT&T (T 0.53%) and Vici Properties (VICI 0.52%).
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1. AT&T
Over the past few years, AT&T abandoned its dreams of building a media empire by spinning off DirecTV, Time Warner, and its other smaller media assets. Those divestments simplified its business, freed up more resources to expand its higher-growth 5G wireless and fiber segments, and gave it more breathing room to reduce its debt.
AT&T's wireless postpaid business -- which drives most of its growth -- gained 1.7 million subscribers in 2023, 1.7 million subscribers in 2024, and 725,000 subscribers in the first half of 2025. Its fiber business added 1.1 million connections in 2023, 1 million connections in 2024, and 504,000 connections in the first half of 2025. The robust growth of those two core businesses offset its ongoing decline of its business wireline segment.
AT&T's free cash flow (FCF) rose 18% to $16.8 billion in 2023 and 5% to $17.6 billion in 2024. But for 2025, it expects its FCF to dip back to the low-to-mid $16 billion range as it ramps up its 5G and fiber investments, deals with higher tax rates, and divests its remaining 70% stake in DirecTV.
However, its FCF should still easily cover its full-year dividend payments, which came in at $8.1 billion in 2023 and $8.2 billion in 2024. That means it has plenty of room to raise its forward dividend yield of 4.3%, which still easily beats the 10-Year Treasury's 4% yield.
From 2024 to 2027, analysts expect AT&T's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to grow at a CAGR of 3%. That's a steady growth rate for a stock that trades at less than 7 times this year's adjusted EBITDA. I believe that low valuation and high yield should limit its downside potential through the next market swoon.
2. Vici Properties
Vici is an experiential real estate investment trust (REIT) that owns 93 casinos, resorts, and other entertainment properties across the U.S. and Canada. As an REIT, Vici buys properties, rents them out, and splits its rental income with its investors. It's obligated to pay out at least 90% of its pre-tax profits as dividends to maintain a lower tax rate.
Vici's largest tenants include Caesars Entertainment (CZR -1.06%), MGM Resorts International (MGM -0.39%), and Penn Entertainment (PENN -3.93%). These gaming businesses certainly aren't immune to the macro headwinds, but Vici locks them into multi-decade leases that are pinned to the Consumer Price Index (CPI) to keep pace with inflation. The tight government regulations and high operating costs for casinos also make it difficult for its tenants to relocate their businesses.
That's why Vici, unlike many other REITs, has maintained a perfect occupancy rate of 100% since its IPO in 2018. For 2025, it expects its adjusted funds from operations (AFFO) per share to rise 4%-6% to $2.35-$2.37 and easily cover its forward dividend rate of $1.73 per share. That equals a high forward yield of 5.8%, and it's raised its payout every since its public debut. At $31, Vici still looks like a bargain at 13 times this year's AFFO per share.
As interest rates decline, it will become cheaper for Vici to buy more properties. A warmer macro environment should also generate stronger tailwinds for the gaming and resorts market. All of those strengths make Vici an easy stock to recommend, even as the market hovers near its record highs.
