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Russian (RU) Sat, Sep 13, 2025, 12:15 PM 4 min read
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REITs' structure makes them enticing for dividend investors.
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Venerable Realty Income leases primarily to retailers.
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Vici Properties, started less than a decade ago, has gaming and entertainment properties.
Many investors seek dividend-paying stocks as a way to generate regular income. Choosing among real estate investment trusts (REITs) provides a good way to accomplish this goal.
That's because REITs, which own various types of properties or mortgages, must pay out at least 90% of their taxable income as dividends.
It's typically a simple business, but REITs have different risk and return profiles. After narrowing the search down to Realty Income (NYSE: O) and Vici Properties (NYSE: VICI), which one makes the better long-term investment?
We have to understand each one's business better before making the determination.
Realty Income has been in existence for over five decades. It owns over 15,600 properties.
The company generates most of its rental income from retailers like Dollar General and Home Depot. In fact, the retail sector accounted for about 80% of Realty Income's annual rent.
That's certainly a risk, given the constantly changing technology landscape that makes online shopping easier, faster, and more convenient. However, Realty Income seeks to minimize that risk by seeking tenants that have appealing in-person shopping characteristics.
Based on the company's occupancy rate, which remains high, it doesn't look like it's an issue. In the second quarter, it had a 98.6% occupancy rate. It's also extracting higher rental renewal rates, receiving a 3.4% increase during the quarter.
The business has supported consistently higher dividends. Paying out monthly, the board of directors has raised payouts annually for about 30 years. It typically increases dividends multiple times a year.
Realty Income looks like it can cover its dividends. Management expects adjusted funds from operations (FFO) to reach $4.24 to $4.28 a share (1% to 2% above 2024's $4.19), while it currently has an annualized $3.23 dividend rate. FFO is a key measure for REITs, since it's the cash available for distribution.
Realty Income's stock has a 5.4% dividend yield. For comparison, at the end of July, the FTSE Nareit All Equity REITs Index had a 4% yield.
Vici Properties, formed in 2017, doesn't have an extensive operating history. It leases its properties to gaming and entertainment companies.
These companies tend to have results that fluctuate with the economic cycle. That's because people travel less when they're concerned about their personal situation.
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