Real estate investment trusts (REITs) own, operate or finance income-producing real estate; they avoid double taxation by organizing as a corporation and paying a minimum of 90% of net income to shareholders each year in the form of dividends, explains Mark Skousen, dividend expert and editor of High-Income Alert.
That means yields in the sector are higher than average. And that — along with strong appreciation potential — is just what we look for with this service. I have a new recommendation for you in the form of a REIT that is also a momentum stock.
VICI Properties (VICI). Based — appropriately — in Las Vegas, VICI owns, acquires and develops gaming, hospitality and entertainment properties.
It operates 20 casinos, 15,000 hotel rooms, four championship golf courses, 150 restaurants, bars and nightclubs, 780,000 square feet of convention space and more than 50 retail outlets. Just a few of its marquee properties include Caesar’s Palace in Vegas, Harrah’s in Lake Tahoe and Bally’s in Atlantic City.
In addition to organic growth, VICI benefits from steady acquisitions. Last week, for example, it announced -- in partnership with Penn National Gaming (PENN) — the purchase of the Greektown Casino-Hotel in downtown Detroit for $1 billion in cash.
VICI will own the land and real estate and Penn National will acquire the operating assets. The Greektown Casino-Hotel features 100,000 square feet of casino space, three restaurants and 400 luxury high-rise hotel rooms. VICI indicates that the buyout will boost sales and earnings as soon as the deal closes in a few months.
While most stocks have undergone a serious correction — along with the broad market — over the last six weeks, VICI has not. In fact, it is close to a new 52-week high, and even sits on elite list of Investor’s Business Daily’s 50 top momentum stocks in the United States.
It is not hard to see why. Sales and earnings are booming. And I expect net income to jump from $1.51 a share this year to nearly $2 in 2019. That should send the stock higher. And the dividend -- already generous at 5.44% -- will rise too. In short, this is a well-managed REIT with strong fundamentals and excellent short-term trading potential.
