This Dividend Stock Is Teeing Up a New Investment Direction
VICI Properties (NYSE: VICI) offers investors a generous 4.2% dividend yield at a time when an S&P 500 Index fund will only get you 1.5%. The real estate investment trust (REIT) is relatively young, however, and still has a highly focused portfolio. But management is already taking steps to change the diversification issue as it seeks to broaden its investor appeal.
VICI Properties was created in late 2017 after being spun off from Caesars Entertainment. The move was really a way for Caesars to raise capital, as it effectively sold its properties to VICI. At the time, casino-focused REITs were rare. They still are, noting that VICI closed on its acquisition of peer MGM Growth Properties in late April. The only other large competitor at this point is Gaming & Leisure Properties.
There are a couple of problems with the casino niche. First off, there are only just so many desirable gaming properties to buy. That's not to suggest that the investment opportunity has been exhausted, but there's not a huge runway for growth if these REITs want to focus on owning the top casinos. Second, the most attractive casinos are massive assets that usually encompass the casino itself, hotels, eateries, shopping, and entertainment space. All of which take a hit when casino demand falls during difficult periods, such as recessions.
Source Fool.com
