So where in this uncertain world does a gaming equity investor put his or her money for safety?
The answer is the two gaming REITs. And it’s not even close.
Both are providing investors with stock appreciation and significant dividends.
Looked at in the most negative way, as of this writing VICI Properties is just 6.6 percent below its 52-week high and the stock pays a 4.3 percent dividend. Gaming & Leisure Properties (GLPI) is off 7.9 percent, and its dividend yields a healthy 5.85 percent. In other words, on a total return basis, GLPI is down just 2 percent from its high.
Looked at from the other side, they are well up off their lows: VICI 27 percent and GLPI 16 percent. Year-to-date, VICI is up over 11 percent and GLPI is up marginally.
Compare that to the major stock market measures.
From 52-week high Year-to-date
Dow Industrials -18.4 percent -12.6 percent
S&P 500 -16.7 -16.3
Nasdaq Composite -26.5 -24.7
Russell 2000 -29.0 -18.8
Or compare them to gaming stocks. Here are select stocks as groups from their highs:
US casino regionals -43.7 percent
Big US casinos -43.4
US gaming tech -40.6
iGaming, sports bet -63.0
Pure Macau casinos -49.8
Or how about other REITs?
Nine select lodging REITs -19.6 percent Dividend yield: 1.10 percent
ALPS REIT ETF -17.9
Now, growth-intoxicated investors might be bored by VICI and GLPI. After all, they don’t sell at multiples of promised profits several years out as online sports-iGaming stocks continue to do, despite their crashes. And collecting rent is not as exciting as designing and building new resorts or touting the next technology innovation or offering free play on exotic new sports bets.
But that doesn’t mean growth isn’t there. Both VICI and GLPI have prudent acquisition strategies to use their strong capital positions to finance growth. Both continue to have safety as their tenants remain rock-solid rent payers.
Just based on consensus of analyst forecasts, both stocks have prospects of healthy returns not just on a relative basis to other stocks or to inflation, but in absolute terms. Consensus is for VICI stock to rise 13.7 percent over the next 12 months and GLPI 13.5 percent. Add in current dividends and total returns would be 18 percent for VICI and 19.4 percent for GLPI.
And those projections do not include further acquisitions that VICI and GLPI will continue to make and that add to those returns.
Of course, the casino world is of limited size, but VICI and GLPI can and are extending into adjacencies. VICI is investing in non-gaming experiential properties as it calls them, such as development of a Great Wolf water park resort in Southwest Florida. GLPI has an agreement that can help Cordish Companies expand its highly successful brand of non-gaming entertainment properties.
The world of entertainment properties outside of gaming is, as a practical matter to any investor, unlimited. And VICI and GLPI are positioning themselves to capitalize on the opportunities.
Meanwhile, there are still a lot of properties existing and under development in gaming to provide steady acquisition growth for years to come.
Bottom line: in an era of inflation and recession fears, the gaming REITs provide returns, growth and safety. It’s hard to ask for more.
