Here's How to Play VICI Properties Stock After 9.5% YTD Rise

VICI Properties Inc. VICI has seen its stock rally 9.5% so far in the year, closing at $31.97 on Monday. It has outperformed not only the Zacks REIT and Equity Trust - Other industry but also the S&P 500 composite over the same time frame. Last month, VICI, which specializes in gaming and entertainment properties, came up with its fourth-quarter and full-year 2024 results that reflected continued benefits from its expansion efforts and strategic investments. After the quarter ended, VICI revealed a strategic partnership with Cain International and Eldridge Industries, committing $300 million to a mezzanine loan supporting the development of One Beverly Hills.Moreover, solid dividend payouts remain the biggest attraction for REIT investors, and VICI Properties has remained committed to that. It has increased its dividend five times in the last five years, and its five-year annualized dividend growth rate is 8.05%. Check VICI Properties’ Dividend History.However, before hastily deciding to buy this stock or book profits, it’s important to evaluate whether this REIT has the growth potential to sustain its dividend payments and to check whether the current concerns could significantly affect the company's long-term performance. Let’s delve deeper.Year-to-Date Price PerformanceImage Source: Zacks Investment ResearchIs VICI Properties' Growth and Dividend Built to Last?REIT investors are often drawn to strong dividend payouts, and VICI Properties stands out with a compelling ~5.5% dividend yield. Since 2018, the company has delivered an impressive 7% annual dividend growth rate, outpacing many triple-net REIT peers like Agree Realty Corporation ADC, Essential Properties Realty Trust, Inc. EPRT and Four Corners Property Trust, Inc. FCPT. With a commitment to distributing 75% of its adjusted funds from operations (AFFO) to shareholders, VICI offers a dependable income stream, making it an appealing option for dividend-focused investors seeking both stability and long-term growth.Encouragingly, VICI Properties' dividend is backed by a solid and reliable foundation, as the company has established itself as a leading experiential REIT with a high-quality portfolio of gaming and entertainment assets. Anchored by iconic properties such as Caesars Palace Las Vegas, MGM Grand and The Venetian Resort Las Vegas, along with other top-tier gaming and experiential destinations across North America, VICI is well-positioned for continued growth. The company's strength is further reinforced by the resilience of the American consumer, particularly in the enduring demand for experiential entertainment.VICI Properties boasts a diverse portfolio of 54 gaming and 39 experiential assets across North America, all backed by long-term triple-net leases with an average duration of 40.7 years. With a 100% occupancy rate, VICI’s properties are essential to its tenants, who encounter substantial regulatory and financial challenges if they were to relocate. This stability translates into reliable rental income, reinforcing the company's ability to sustain consistent dividend payments. Moreover, for 2025, VICI expects 42% of rent roll with CPI-linked escalation, which is further projected to rise to 90% by 2035. This inflation-linked rent growth helps the company maintain purchasing power and revenue expansion, even in inflationary environments. Additionally, 74% of VICI’s rent roll comes from S&P 500 tenants, enhancing income stability and creditworthiness.Since its founding in 2017, VICI has grown its adjusted EBITDA by 350%, expanding beyond gaming properties to include experiential assets such as Chelsea Piers and Bowlero. This strategic diversification strengthens revenue stability while mitigating sector-specific risks. Moreover, the company enjoys financial resilience with $3.3 billion in liquidity as of Dec. 31, 2024, giving it ample financial flexibility to navigate market fluctuations. VICI’s last quarter annualized net leverage ratio stood at 5.3, within its long-term target range of 5.0-5.5.Key Challenges to Weigh Before Investing in VICI StockDespite efforts to diversify, gaming properties remain VICI’s primary revenue driver, leaving it vulnerable to industry-specific risks such as regulatory changes, economic downturns affecting discretionary spending and potential challenges within the gaming sector. Financial difficulties faced by key tenants could strain cash flows, underscoring the company's heavy dependence on this segment for a substantial share of its earnings.As a REIT, VICI is highly sensitive to interest rate movements. Higher rates can raise borrowing costs and make its dividend yield less attractive relative to risk-free Treasury yields. The company also carries a significant debt load, totaling approximately $17.1 billion as of Dec. 31, 2024. Furthermore, continued volatility in REIT markets, driven by evolving interest rates and uncertain credit conditions, remains a key concern for investors.VICI’s Estimate Revisions and ValuationThe estimate revision trends reflect positive sentiments. The Zacks Consensus Estimate for 2025 adjusted funds from operations (AFFO) per share has increased by two cents over the past month, while the same for 2026 has also moved north marginally over the same time frame.VICI Estimate Revision TrendImage Source: Zacks Investment ResearchFind the latest EPS estimates and surprises on Zacks Earnings Calendar.In terms of valuation, VICI Properties stock still looks cheap as it is trading at a forward 12-month price-to-FFO of 13.63X, below the REIT-Other industry average of 15.33X but higher than its one-year median of 13.27X. It is also trading at a discount to triple-net REIT peers, including Agree Realty Corporation, Essential Properties Realty Trust and Four Corners Property Trust.Forward 12 Month Price-to-FFO (P/FFO) RatioImage Source: Zacks Investment ResearchFinal Thoughts on VICIVICI Properties remains a compelling dividend stock, backed by its high-quality portfolio, inflation-protected cash flows and disciplined expansion strategy. While its long-term outlook remains solid, short-term headwinds such as elevated debt levels and macroeconomic uncertainty pose challenges. Investors may benefit from monitoring policy shifts, inflation trends and their potential impact on the company to assess whether the current valuation signals a buying opportunity or accounts for inherent risks. For existing shareholders, VICI’s strong history of dividend growth and focus on high-demand property sectors make a convincing case for staying invested.At present, VICI Properties carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report VICI Properties Inc. (VICI): Free Stock Analysis Report Agree Realty Corporation (ADC): Free Stock Analysis Report Four Corners Property Trust, Inc. (FCPT): Free Stock Analysis Report Essential Properties Realty Trust, Inc. (EPRT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks