With the warfare within the Center East and oil costs climbing, it seems to be much less probably that the Fed will minimize charges anytime quickly. Nevertheless it’s not at all times going to be like this perpetually. As soon as tensions ease and the stability of dangers shifts from inflation to one thing a little bit extra “regular”, fee cuts might develop into extra probably.
If and when that shift occurs, borrowing turns into simpler, and cash cycles out of some sectors into others. One of many greatest beneficiaries of that form of change is actual property, and REITs look extra engaging.
Nonetheless, there are over 225 REITs which can be traded publicly in the USA. A few of them are higher than others, for causes that will not be as apparent. Two of probably the most well-known in investing circles are Realty Revenue and VICI Properties.
However which one’s higher as a long-term guess? Let’s discover out.
Actual property funding trusts, or REITs, are corporations that personal and handle income-producing properties. They generate income primarily from lease and are required to distribute at the least 90% of their taxable earnings to shareholders as dividends. That’s why they have a tendency to draw dividend buyers. The mix of reliably constant money circulation and excessive yields makes them nice additions to long-term portfolios.
First up is Realty Revenue, or higher often known as the “month-to-month dividend firm.”
The REIT focuses on leasing to retail and industrial shoppers, and its portfolio includes grocery and comfort shops, house enchancment facilities, greenback shops, fast-food chains, drug shops, eating places, and basic merchandise shops.
As of its This autumn ‘25 submitting on February 24, 2026, the REIT “owns or holds pursuits in 15,511 properties, leased to 1,761 shoppers throughout 92 industries.”
Then again, VICI Properties is an “experiential” REIT that focuses on sports activities and gaming services, resorts, eating places, and different comparable properties.
A few of its properties embody Caesars Palace, The Venetian Resort, the MGM Grand, and the Chelsea Piers.
As of its This autumn financials, VICI owns “93 experiential belongings, made up of 54 gaming properties and 39 different experiential properties throughout the U.S. and Canada.”
Based mostly on that alone, Realty Revenue has a extra diversified portfolio of properties. Additionally, its tenants are likely to function in additional resilient, “staple” sectors that aren’t overly delicate to main financial cycles.
In the meantime, VICI’s extra concentrated property possession places it extra at odds with financial cycles tied to tourism and discretionary spending.
On the floor, VICI seems to be the riskier REIT.
However is it, actually?
VICI Properties primarily operates as a REIT offering triple-net leases (NNN). It is vital as a result of the tenants pay for property taxes, constructing insurance coverage, and upkeep and repairs- issues that landlords often cowl. The consequence? Lease funds are acquired web of taxes, insurance coverage, and upkeep. Therefore, the triple web lease.
With this construction, lease earnings is extra predictable, and there are fewer surprising bills, comparable to sudden, huge repairs. Nonetheless, triple-net leases additionally deepen VICI’s dependence on the shopper’s enterprise well being. If a shopper experiences monetary misery, VICI might face lease renegotiations, relying on how ironclad its contracts are. Worst involves worst, sector-wide points might hit a number of tenants without delay.
Now, Realty Revenue operates a lot in the identical approach and faces the identical dangers. However the distinction is is that Realty Revenue has a much more diversified portfolio, so industry-wide setbacks received’t probably have an effect on it as a lot.
So, how are these two companies doing? Let’s have a look at fast monetary metrics for the complete yr of 2025.
Metric
Realty Revenue (O)
VICI Properties (VICI)
Income
$5.75 B
$4.0 B
Web earnings
$1.06 B
$2.8 B
FFO per share
$4.25
$2.61
AFFO per share
$4.28
$2.38
By income, Realty Revenue is bigger, and based mostly on web earnings, VICI Properties is extra worthwhile.
Nonetheless, REITs don’t function the identical approach as different corporations. Commonplace accounting practices at all times contain depreciation of property. And when your corporation is only property leasing, reported earnings can look decrease than the money the properties are literally producing,
That’s why, when contemplating them for dividend portfolios, funds from operations, or FFO, is an effective place to start out.
Funds from operations, or FFO, is a metric that helps buyers consider an organization’s underlying working efficiency. That stated, FFO isn’t a measure of money circulation, which is why many buyers focus extra intently on adjusted FFO when assessing dividend sustainability. Larger AFFO can typically recommend increased dividends sooner or later.
And right here, we will see that Realty Revenue earns over 60% extra AFFO than VICI Properties.
So let’s see how the differing AFFO numbers have an effect on their dividends. I’ll be utilizing final yr’s dividend knowledge, since REIT payouts can fluctuate.
During the last 12 months, Realty Revenue paid $3.23 per share in dividends, yielding round 5.36%. It’s additionally been a member of the Dividend Aristocrat listing since 2020 and has elevated its payouts for 31 straight years. And eventually, Realty Revenue’s dividend payouts have grown 25% within the final 5 years.
In the meantime, VICI Properties paid $1.78 per share final yr, translating to a 6.59% yield. VICI additionally elevated its dividends for 7 straight years, and its payouts have grown by 40% during the last 5 years.
At present, a consensus amongst 24 Wall Avenue analysts fee Realty Revenue a Maintain, with a median rating of three.38 out of 5. The imply worth goal is $67.47, and the excessive worth goal is $75, suggesting as a lot as 24% upside over the following yr.
In the meantime, a consensus amongst 23 analysts fee VICI Property a Reasonable Purchase with a median rating of 4.26. The imply worth goal is $34.71, whereas the excessive worth goal is $40, suggesting VICI inventory may surge as a lot as 47% over the following yr.
Total, VICI seems to be extra engaging based mostly on analyst sentiment, yield, and five-year development. That stated, Realty Revenue has an extended historical past of dividend development and will show extra resilient in a rate-cut atmosphere, as its bigger scale and broader diversification might make it a steadier beneficiary of decrease charges.
On the date of publication, Rick Orford didn’t have (both straight or not directly) positions in any of the securities talked about on this article. All data and knowledge on this article is solely for informational functions. This text was initially printed on Barchart.com
