We recently compiled a list of the 13 Best Dividend Stocks to Buy Under $50. In this article, we are going to take a look at where VICI Properties Inc. (NYSE:VICI) stands against the other dividend stocks.
AI stocks are stealing the spotlight today as the appetite for these services continues to gain traction globally. This surge in interest has temporarily diverted investor attention from dividend-paying equities. This year, dividend stocks have once again lagged behind the market, a trend highlighted by Dan Lefkovitz, a strategist at Morningstar Indexes, during a recent interview with the firm. Here are some commeants from the analyst:
“I just want to mention two interesting observations. One, interest rates have come down this year, yet dividend-paying stocks have underperformed. There’s this conventional wisdom that we’ve talked about in the past that falling rates are good for dividend payers and rising rates are bad for dividend payers, yet dividend stocks have underperformed in a falling rate environment. Second, outside of the US, dividend stocks are a little bit ahead of the broad market. We can table those, but I just thought they’re interesting to note.”
That said, analysts predict this trend won’t persist, as dividend stocks are expected to regain their strength and prominence soon. Bank of America analyst Ohsung Kwon suggested that a dividend revival might be on the horizon. His team anticipates a 10% increase in overall dividends from the companies in the broader market in 2025, driven by investors’ growing preference for cash. Highlighting this trend, major tech firms began paying dividends for the first time this year. According to Janus Henderson, these tech giants accounted for roughly 25% of the total underlying dividend growth in the US during the third quarter.
Also read: 10 Best European Dividend Stocks To Buy
When it comes to dividend stocks, analysts consistently recommend prioritizing dividend growth over chasing high yields. Dan Lefkovitz, a strategist with Morningstar’s Index team, emphasized this approach, pointing out that dividend growth is a completely different ball game compared to high-dividend investing. He explained that dividend growth signals a company’s strong competitive position and improving prospects. A dividend-growth portfolio typically mirrors the market more closely in terms of sector exposure and growth-versus-value traits, including metrics like price-to-earnings ratios. While it maintains a value bias, it leans more toward the core market than a high-dividend portfolio.
Over the years, companies with a track record of steadily increasing their dividends have generally outperformed non-dividend-paying firms while experiencing lower volatility. Although dividends are not set in stone and can vary, as seen in the current climate, they have significantly contributed to overall equity returns over time. Between 1930 and 2023, dividends and their reinvestment made up 40% of the annualized total returns in the broader market, with the rest driven by capital gains.
Maintaining steady dividend growth is a demanding goal, as it necessitates exceptional financial stability. For businesses still in their growth phase with relatively lower stock prices, assessing the sustainability of their dividends becomes an essential and simple factor to analyze. This article explores some of the top dividend stocks currently priced under $50.
Our Methodology:
For this list, we used a Finviz stock screener to find dividend stocks trading below $50 as of the close of December 20. From the initial list, we narrowed down the selection to companies that pay regular dividends to shareholders and possess strong dividend policies, ensuring consistent future dividends. From the resultant list, we picked 10 stocks with the highest number of hedge fund investors, using Insider Monkey’s Q3 2024 database of 900 hedge funds and their holdings. These stocks are ranked in ascending order of hedge funds having stakes in them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A business executive in a sharp suit shaking hands on a real estate deal.
VICI Properties Inc. (NYSE:VICI)
Number of Hedge Fund Holders: 35
Share Price as of the Close of December 20: $28.79
VICI Properties Inc. (NYSE:VICI) ranks sixth on our list of the best dividend stocks under $50. The real estate investment trust company owns casinos and entertainment properties across the US and Canada. The company maintains a robust balance sheet, finishing Q3 2024 with $355.7 million in cash and cash equivalents. This solid cash position has supported the company in increasing its dividend payouts for seven straight years, with a compound annual growth rate (CAGR) of 7% since its IPO. In the latest quarter, the company distributed around $453 million in dividends. It currently pays a quarterly dividend of $0.4325 per share and has a dividend yield of 5.97%, as of December 23.
In Q3 2024, VICI Properties Inc. (NYSE:VICI) reported revenue of $964.6 million, a 6.7% increase compared to the previous year. Net income attributable to common stockholders grew by 31.7% year-over-year, reaching $732.9 million, with a per-share increase of 27.4%, totaling $0.70. AFFO attributable to common stockholders rose by 8.4% to $593.9 million, and on a per-share basis, it increased by 4.9% to $0.57.
In addition to its strong earnings and consistent dividend history, VICI Properties Inc. (NYSE:VICI) has attracted investor attention due to its business model. While its heavy dependence on the gaming sector may seem risky, casinos tend to be resilient during recessions. The company secures tenants with long-term contracts, and the strict regulations in the gaming industry create a protective barrier, making it challenging for tenants to relocate their operations. This approach has allowed Vici to maintain a 100% occupancy rate since its IPO in 2018, even amidst the disruptions caused by the COVID-19 pandemic in the travel, hospitality, and casino industries. Furthermore, most of the company’s long-term leases are linked to the consumer price index (CPI), enabling it to adjust rents regularly in line with inflation.
According to Insider Monkey’s database of Q3 2024, 35 hedge funds held stakes in VICI Properties Inc. (NYSE:VICI), up from 33 in the previous quarter. The consolidated value of these stakes is over $787.6 million. Among these hedge funds, Ken Griffin’s Citadel Investment Group was the company’s leading stakeholder in Q3.
Overall VICI ranks 6th on our list of the best dividend stocks to buy under $5. While we acknowledge the potential of VICI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than VICI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
