We recently compiled a list of the 10 Best Casino Stocks that Pay Dividends. In this article, we will have a look at where VICI Properties Inc. (NYSE:VICI) ranks among other casino stocks that pay dividends.
The casino industry is making a comeback after the setbacks caused by the pandemic in 2020. It took a while for the sector to recover, with several factors at play, but the rebound is now clear with the easing of social distancing measures. Data from the Gaming Inspection and Coordination Bureau showed that Macau’s gaming revenue surged by 14.8% in August this year, surpassing expectations. The increase in demand for entertainment during China’s summer vacation has driven growth in the world’s largest casino hub. Casino stocks fall under the larger leisure and hospitality sector and are affected by a range of influences, such as the state of the economy, consumer spending habits, and changes in gambling regulations.
Also read: 10 Best Casino Stocks To Buy According to Analysts
Investor confidence in the casino industry has also skyrocketed, thanks to their ability to consistently hit it out of the park over the years. Casino revenues experienced a notable increase in 2023. Additionally, online casinos, which mainly gained importance during the pandemic, also posted record earnings last year. A report by the American Gaming Association (AGA) revealed that brick-and-mortar casino slots and table games generated a record $49.4 billion in 2023, marking a 3.3% increase over 2022. On the state level, 19 out of 27 traditional gaming markets achieved record annual revenues. Online casino revenue also surged in 2023, growing 22.9% year-over-year to $6.2 billion across the six states with fully legalized iGaming. The report further highlighted that 12 of the top 20 commercial casino gaming markets saw revenue growth, with the Las Vegas Strip leading the way with the most significant year-over-year gains.
The casino industry, like many others, is evolving quickly to keep up with current trends. In a recent move, Singapore has made changes to the Casino Control Act, allowing its two casinos to offer cashless gaming options, though cryptocurrencies will not be permitted, as reported by CNA. Cashless bets can be placed at gaming tables or machines by using virtual credits from cashless gaming accounts or e-wallets. This adjustment is the most recent update to casino regulations in Singapore, which had previously tightened rules by lowering the threshold for monitoring cash deposits at casinos to prevent misuse by terrorist and criminal groups.
The shift to cashless betting has highlighted people’s growing preference for digital platforms. The pandemic underscored the need for contactless options while still allowing people to enjoy these activities. Sports betting is also becoming more prominent since it operates through digital channels, providing a similar thrill to that of casinos. According to the AGA, while commercial gambling revenue is on the rise in most states where it’s legal, the growth in sports betting and online gambling is outstripping that of traditional casinos. So much so that it seems that Americans are withdrawing funds from their stock brokerage accounts to support their online betting habits. This is the main conclusion from a recent working paper titled Gambling Away Stability: Sports Betting’s Impact on Vulnerable Households. The paper suggests that for every dollar spent on sports betting, net investments in stocks and other financial assets decreased by just over $2. With that, we will now take a look at some of the best casino stocks that pay dividends.
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Our Methodology:
For this list, we scanned Insider Monkey’s database of Q2 2024 and selected companies that are involved in the casino and gambling industry. These companies own and operate casinos, resorts, and other gaming and entertainment facilities. From the resultant list, we picked the 10 best casino stocks that pay dividends to shareholders and ranked them in ascending order of the number of hedge funds having stakes in them as of Q2 2024.
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).
3. VICI Properties Inc. (NYSE:VICI)
Number of Hedge Fund Holders: 33
VICI Properties Inc. (NYSE:VICI) ranks third on our list of the best casino stocks that pay dividends. The American real estate investment trust company mainly invests in casinos and entertainment properties. The company has considerable involvement in the casino industry, with Caesars Entertainment and MGM Resorts being two of its major tenants. A substantial portion of its revenue is generated from the 54 properties that host casinos, and frequently, associated hotels as well. The stock’s year-to-date returns come in at over 3% and in the past year, it has returned over 7%.
Although VICI Properties Inc. (NYSE:VICI) has a strong foothold in the casino industry, it is actively seeking to diversify its portfolio. Acknowledging the economic volatility of the casino sector, the company provided a $250 million loan to Great Wolf Lodge. This action reinforces its ongoing partnership with the operator of a chain of indoor water parks and hotels. The second quarter of 2024 remained strong for the company as its revenues grew by 6.5% on a YoY basis at $957 million. Its net income came in at $741.3 million, up 7.3% from the same period last year. At the end of the quarter, $347.2 million was available in cash and cash equivalents.
VICI Properties Inc. (NYSE:VICI) is one of the best casino stocks that pay dividends as the company returned $430 million to shareholders through dividends. Moreover, the company has raised its payouts every year since the inception of its dividend policy in 2018. On September 5, it declared a 4% hike in its quarterly dividend to $0.4325 per share. The stock supports an impressive dividend yield of 5.14%, as of September 12.
According to Insider Monkey’s database of Q2 2024, 33 hedge funds had invested in VICI Properties Inc. (NYSE:VICI), compared with 38 in the previous quarter. These stakes have a total value of nearly $936 million.
Overall, VICI ranks 3rd on our list. While we acknowledge the potential for VICI to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. 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.
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Disclosure: None. This article is originally published at Insider Monkey.