Clogged ports, economic stimulus, and supply chain disruptions caused by the COVID-19 pandemic led to a rapid rise in inflation. This had a tremendous effect on investors and savers. The Federal Reserve rapidly raised interest rates to counter inflation, and suddenly, bonds, certificates of deposit (CDs), U.S. Treasuries, and other fixed-income investments yielded more than 5%, the highest in years. However, as you can see, inflation is back to less than 2.5%.
U.S. Inflation Rate data by YCharts
The Fed is lowering rates now, so the days of high yields on fixed-income investments are numbered. Many of the investments people bought are coming due, so you may have $10,000 or another amount to reinvest soon.
Vici Properties(NYSE: VICI) is a terrific place to put that money to continue bringing in tons of passive income. Here's why.
What is Vici Properties?
Beating the house in Las Vegas is tough; the odds are not in your favor. After all, they don't pay for the neon lights and fancy resorts with fairy dust. Investing in the house is a much better way to make money.
Many of the resorts and casinos in Las Vegas don't own the land or buildings they occupy. Instead, the real estate investment trust (REIT) Vici Properties does. Vici owns some of the most recognizable properties in the world, like MGM Grand, Mandalay Bay, Caesars Palace, The Venetian, and many others. In total, it owns 93 properties in 26 states and one in Canada.
Owning these trophy properties is a significant advantage to other REITs because they are difficult to replace, unlike an office building or warehouse. Also, the rents are extremely high, $33 million on average, which means Vici makes tons of money without managing hundreds or thousands of assets.
You may wonder if Vici would suffer if the economy turns negative and tourism declines. However, Vici collected 100% of the rent during COVID-19, when the Las Vegas strip shut down entirely for months. This is the advantage of having deep-pocketed tenants.
Is Vici Properties stock a buy?
Vici is an excellent stock for passive income. The current dividend yield is about 5.3%, and the payout has increased every year since Vici's inception in 2017. The company's funds from operations (FFO), the money it uses to pay the growing dividend, is at an all-time high.
VICI Funds from Operations (TTM) data by YCharts
The increasing FFO means the dividend is safe and likely to continue rising.
The yield is also higher than many other popular REITs:
VICI Dividend Yield data by YCharts
As interest rates fall, dividend investors must look beyond fixed-income investments like bonds for high yields. Vici offers a safe, rising dividend with a yield of more than 5%.
Don't try to beat the house in Vegas; buy a piece of it instead.
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*Stock Advisor returns as of November 4, 2024
Bradley Guichard has positions in Vici Properties. The Motley Fool has positions in and recommends American Tower, Prologis, and Realty Income. The Motley Fool recommends Vici Properties and recommends the following options: long January 2026 $180 calls on American Tower, long January 2026 $90 calls on Prologis, and short January 2026 $185 calls on American Tower. The Motley Fool has a disclosure policy.
