VVICI
    GGLPI
    REIT StocksDividend Investing

    Two 7% Casino Landlords. I Like Both - But One Wins

    Two 7% Casino Landlords. I Like Both - But One Wins
    • Gaming REITs behave like inflation-linked bonds - 30-50 year triple-net master leases with CPI floors, ~7% yields, contractually growing cash flows and downside protection
    • VICI preferred, owns ~100 properties incl 61 casinos, ~660 acres and 2.6 of 4 miles frontage on the Las Vegas Strip, largest private convention-space owner and ~66,000 hotel rooms
    • VICI financial strengths, average rent ~ $33M per property, Venetian pays > $300M annually, high triple-net margins, EBITDA up ~400% since 2017, investment grade at all three agencies
    • Master leases force portfolio transfer or a new operator if a tenant fails, tenants pay taxes/insurance/upkeep, both landlords collected ~100% of rent during the 2020 shutdown
    • Both yield ~7% and suit income allocations; VICI wins on scale, irreplaceable Strip assets and credit profile - TOLL+M favors VICI by 8 points, a clear but modest advantage
    Leo Nelissen
    Jul 2, 20268:13 AM ET2100

    I need to tell you two things before we start.

    1. It's increasingly hard to buy high-quality income. While I am writing this, the highest-yielding REIT in the S&P 500 yields less than 7.0%. The Vanguard Real Estate Index Fund ETF Shares (VNQ) yields less than 3.5%.

    1. There's an old line that the house always wins. It's true. But there's a seat at the casino that wins more reliably than the house, and you don't need a single chip to take it. You just have to own the building the house plays in.

    Now, you probably know where I'm going with this, as there are still ways to buy income.

    I'm talking about gaming REITs that have been unloved for a long time, despite countless bullish articles from analysts and researchers. That includes my coverage.

    As most of you will be aware, there are two clean ways to take it on the public market: VICI Properties (VICI) and Gaming and Leisure Properties (GLPI). Both are landlords in the casino industry. Both collect rent on leases that run 30 to 50 years. Both yield close to 7%. And after going through their latest numbers, I think one is clearly the better buy.

    And as I'm not trading to clickbait subscribers, I'm going to spoil the results right now:

    • Gaming REITs are not casino bets. They're closer to inflation-linked bonds that happen to trade like stocks. Please read that last part again. These are bond-like investments that should be treated as such.

    • Both names are good. This is not a "one of them is bad" story.

    • On my TOLL+M framework, VICI wins. And I'll show you the scorecard before I make you read why.

    Needless to say, on a 0-100 scale, eight points isn't a blowout. It's a clear win for the higher-quality name, with a very good runner-up. Now let me earn those numbers, starting with the part most investors skip.

    Especially as I'm working on a "what-if" portfolio in case I ever have to retire, and, in light of my promise to cover more higher-yielding stocks, I'll present a deep dive into both. And instead of just telling you that they own irreplaceable assets and come with decent yields, we'll discuss the Big Picture and everything you need to know in order to assess these stocks.

    So, let's get to it!

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