VICI Properties' (VICI +0.79%) share price has slumped over the past few months, falling by more than 15% from its recent peak. That has pushed its stock price down toward $25, while driving its dividend yield up over 6%, well above the S&P 500's average (1.2%).
That high-yielding passive income stream could be your ticket to financial freedom.
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A stable and growing dividend
VICI Properties owns a growing portfolio of experiential real estate (e.g., casinos, bowling entertainment centers, and sports and entertainment complexes). It leases these properties to operating companies under long-term, triple-net (NNN) leases. Those rental agreements provide it with steadily rising cash flows as a growing percentage escalates rents with inflation (46% this year, increasing to 90% in 2035). The real estate investment trust (REIT) pays out about 75% of its stable cash flow in dividends, retaining the rest to reinvest in additional income-producing experiential real estate.
The REIT buys properties in sale-leaseback transactions (it recently secured a $1.2 billion deal to acquire seven gaming properties), invests in real estate-backed loans, and provides funding to existing tenants to enhance their properties. Along with rent growth, these new investments help grow VICI's cash flow to support its dividend.
NYSE: VICI
Key Data Points
The company has raised its dividend for eight straight years (every year since its formation). It has grown its payout at a 6.6% compound annual rate during that time frame, much faster than the 2.3% average of other REITs focused on investing in NNN real estate during that period.
With a massive total addressable market opportunity (over $400 billion for U.S. gaming properties alone) and partnerships with many of the leading experiential companies, VICI Properties has lots of growth ahead. That should enable it to continue increasing its dividend. As a result, investors should collect steadily rising passive income, which is the ticket to financial freedom.
