Trump Could Make This Amazing Dividend Stock Even More Valuable Soon; Here's Why
The president is pushing for lower interest rates.
Lower rates will make high-yielding stocks more valuable.
Vici Properties could be a big winner.
10 stocks we like better than Vici Properties ›
Countless inputs influence the price of stocks and the direction of the market; inflation, company earnings, new technology, fiscal and monetary policy, and unemployment, to name a few. One of the most influential is interest rates. Generally, lower rates are good for stocks because they stimulate the economy through lower borrowing costs. However, lower rates can also be a sign of economic challenges, so rising stock prices aren't a given.
Investors can snag yields higher than 4% on safe, fixed-income vehicles like bonds and CDs now. But this probably won't last much longer. Right or wrong, it's no secret that President Donald Trump wants the Federal Reserve to lower the federal funds rate. He is exerting a highly public pressure campaign against Fed Chairman Jerome Powell, and Trump will get to appoint a new chair in May of next year who will undoubtedly share his views.
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When the 4% risk-free investments are gone, people will need to find safe, high-yield investments elsewhere. Here's why real estate investment trust (REIT) Vici Properties (NYSE: VICI) will be a popular choice.
A different kind of REIT
Remote work and downsizing are long-term challenges for real estate investment trusts (REITs) that own office space. But Vici is different. Vici is an "experiential" focused REIT that owns some of the most recognizable casino resorts and other trophy properties in the world, including Caesars Palace, MGM Grand, The Venetian, and Chelsea Piers, to name just a few of the 90-plus holdings.
The focus on trophy properties has many advantages. First, they are extremely difficult to replace. Building a strip mall or office building is much simpler than building a billion-dollar resort. Next, Vici's tenants are deep-pocketed corporations like MGM Resorts International. This means that there is less risk that the rent won't get paid during a downturn. In fact, Vici collected 100% of rents even when many resorts were shut during COVID-19.
Is Vici Properties a buy now?
Vici has raised its dividend annually since its inception and pays $0.43 quarterly now. The current yield of more than 5% is better than most fixed-income options, greater than Vici's five-year average, and more than many other popular REITs, as shown below.
VICI Dividend Yield data by YCharts
Realty Income yields more now. However, Vici's dividend has risen 7.4% compounded annually during the past seven years compared to 2.9% for Realty Income.
One risk to Vici is that there is a limited supply of experiential properties to acquire. But Vici is expanding outside of casino properties. For instance, it invested in resort owner Great Wolf Lodges in 2022 and a partnership on the mixed-use development One Beverly Hills in 2025. Vici also lends money to its tenants for expansion and new development. This means Vici earns interest on the loan and rent on the property.
Vici's funds from operations (FFO), the cash generated from its primary operations, has ballooned from $810 million to $2.7 billion during the past three years. The increase is terrific, as this is the cash the company can use to pay and increase the dividend and fund growth. On a per-share basis, FFO is up from just over $1 to $2.55 during the same period, showing that Vici's management and strategy are highly effective.
Given the company's excellent holdings, impressive yield, and rising cash flow, Vici Properties is an excellent investment. In the likely event that the president gets his desired interest rates cut, investors could flock here for income, making the company even more valuable.
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