1 High-Dividend REIT You'll Wish You Bought In 2022

Looking back 20 years, certain stocks were clearly a smart investment. Take one of Warren Buffett’s favorite companies as an example – Apple Inc., which has produced total returns of over 63,600% over the past 20 years – making a $10,000 investment in Apple’s stock in Dec 2002 worth nearly $6.4 million today.

Another great example can be found in the real estate investment trust (REIT) sector with American Tower Corp. AMT, a company that has experienced steady growth over the past two decades. The REIT was a pioneer in the wireless and broadcast communications real estate space and grew to become one of the largest global REITs with a market cap of $98.6 billion. 

American Tower’s share price grew from $3.49 20 years ago to about $215 today. A $10,000 investment in Dec 2002 would be worth over $758,000 today if dividends were reinvested. 

Where can investors find a similar opportunity today? One likely candidate is VICI Properties Inc. VICI. The company is a fairly young REIT that began trading in 2018 and has since made its growth intentions clear. 

VICI Properties Growth

VICI Properties completed its $4 billion acquisition of The Venetian Las Vegas earlier this year and subsequently acquired its biggest rival, MGM Growth Properties, for $17.2 billion. The REIT is now the largest real estate owner on the Las Vegas strip and one of the largest owners of gaming, hospitality and entertainment destinations in the country.

You could find a lot of similarities between VICI Properties’ current growth and that of American Tower in the early 2000s when it was experiencing rapid growth and merged with one of its closest competitors, SpectraSite.

VICI Properties recently locked in significant growth for 2023 with its recently announced acquisition of the remaining 49.9% stake in the MGM Grand and Mandalay Bay Properties in Las Vegas, which VICI Properties already owns 51.1% of in a joint venture with Blackstone’s Real Estate Investment Trust (BREIT). The acquisition is expected to add an additional $155 million in rental income to the company’s revenue during the first year while increasing debt service by just $54 million.

VICI Properties’ latest guidance shows estimated adjusted funds from operations (AFFO) per share ranging from $1.91 to $1.92 for 2022, and analysts are already giving estimates of AFFO per share of $2.10 to $2.11 for 2023.

The REIT has plenty of other growth opportunities in the pipeline as well, including call options and the right of first refusal on several properties across the country. The number of casinos in the U.S. has grown 6.2% per year on average over the past five years – meaning there will be no shortage of opportunities for VICI Properties in the U.S. alone. Keep in mind the company hasn’t even begun expanding into other countries. 

Besides gaming, VICI’s growth plans include other experiential sectors with demographic tailwinds. It has already made several real estate investments outside of gaming, including four championship golf courses, a mortgage loan made to Chelsea Piers and a financing partnership with Great Wolf Lodge. 

VICI Properties Performance

VICI Properties joined the S&P 500 earlier this year and is the best-performing REIT in the index so far in 2022. In fact, VICI’s stock has outperformed the S&P 500 as a whole this year by nearly 30% – up 12.55% compared to the index being down 17.43%. 

The strong performance is likely da result of the growing number of investors who are catching on to the attractive long-term potential of VICI Properties, which has one of the highest AFFO-per-share growth rates in the sector. The company also has one of the fastest-growing dividends among its peers while maintaining a conservative AFFO payout ratio of around 75%. 

VICI Properties’ current dividend yield sits at 4.62% after increasing its most recent payout. If analyst estimates turn out to be correct with AFFO per share hitting $2.10 or $2.11 in 2023, investors will likely see further increases next year.

While there’s no guarantee that VICI Properties will be the next Apple or American Tower in terms of growth over the next 20 years, investors looking for a reliable dividend could have a hard time finding a better bet.

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