Okay besties, let’s talk about a stock that’s basically the landlord of Las Vegas — and why it’s paying you to be patient. 💸
VICI Properties (NYSE: VICI) is one of those companies that keeps quietly doing everything right while its stock price refuses to get the memo. It just reported higher rental revenue and adjusted funds from operations, raised its full-year outlook, and bumped its dividend up for the ninth year in a row. Nine. Years. Straight. And yet the stock is still sitting more than 20% below its 52-week high. So what’s going on? Let’s break it down like I would with a coaching client over iced lattes.
The numbers that made me smile ☕
Third-quarter results were genuinely solid. Total revenues rose 5.8% to $1.1 billion, and adjusted funds from operations (AFFO — think of it as a REIT’s version of earnings) grew 4.3% to $0.62 per share. That growth is what powers the dividend, which just went up another 2.2% to $0.46 per share. At the recent share price, that works out to a 7.5% yield — one of the highest in the entire S&P 500.
Here’s the part I really love as someone who’s all about sustainable income: VICI’s payout ratio sits at 74%. That means the dividend is well-covered, leaving room for the company to keep investing and growing. And it has been — this year alone it closed a $1.2 billion Golden Entertainment sale-leaseback deal and provided $1.5 billion in construction financing for One Beverly Hills. It also just announced a $2 billion share repurchase program. This is what a well-run income stock looks like on paper.
But here’s the plot twist 🚨
Buried in the earnings report was a $458 million increase in expected credit losses — and most of it traces back to one tenant: Caesars Entertainment. A credit-rating agency downgraded Caesars’ senior secured debt, and VICI adjusted its expectations accordingly.
Why does this matter so much? Because Caesars accounts for roughly 38% of VICI’s rental revenue. That’s like having one client make up more than a third of your freelance income — you’d be paying attention to their bank account too. Caesars is carrying nearly $11.7 billion in debt, and the downgrade came amid concerns about its financial structure ahead of its pending acquisition by Fertitta Entertainment.
Now, important nuance: this is a noncash accounting charge. Caesars hasn’t stopped paying rent. But it’s a flashing yellow light on VICI’s biggest concentration risk, and it’s a big reason the stock hasn’t bounced back after otherwise great earnings.
So… is it a buy? 🤔
At around $24 a share, VICI trades at less than 10 times AFFO, with management guiding to at least $2.47 per share in AFFO this year — an upgraded forecast. For a REIT with this profile, that’s a very reasonable valuation.
Here’s what I’d walk my clients through: at the current 7.5% yield, VICI only needs to grow AFFO per share by 2% to 3% annually to deliver a double-digit total return, even if the valuation multiple never moves. If it sustains its current mid-single-digit growth and the multiple expands, returns could be even better. The math here is honestly kind of beautiful.
But let’s not sugarcoat the risk. If Caesars hits real financial trouble and needs to renegotiate its lease, that could be a meaningful hit to both earnings and the stock’s valuation. This is why I tell my coaching clients: high yield always comes with a reason. Your job is to decide whether that reason is priced in.
Personally, I land on the optimistic side of this trade. The most likely scenario is that Caesars’ new owner sells off some operations to pay down debt, with new tenants signing leases at rents close to current rates. And VICI has literally done this before — just this quarter, it signed a new 20-year master lease with Highfield Investment Group (which acquired Century Casino’s two racetracks) at the same initial base rent as the previous lease. Tenant changes happen; the rent checks keep coming.
My take for the girlies building income streams 💅
VICI’s business is genuinely performing: growing cash flow, rising dividend, healthy payout ratio. The Caesars overhang is real, but the low valuation and 7.5% yield make this an appealing opportunity for risk-tolerant investors who want income with a potential upside kicker. It’s not your “set it and forget it” boring blue chip — it’s more like that gorgeous designer bag you found at a discount because of one scuff mark that might buff right out.
If you’re building a dividend portfolio, this is the kind of higher-risk, high-yield position that can supercharge your income — as long as you size it wisely and don’t bet the whole outfit on one tenant’s credit score. Diversification isn’t just cute, it’s protection.
If you want help figuring out how stocks like this fit into YOUR wealth-building plan — and how to invest with confidence instead of confusion — come join my mailing list or slide into my DMs. Let’s make your money work as hard as you do. ✨
