Real estate investment trusts are historically one of the best-performing asset classes. The FTSE NAREIT Equity REIT Index is what most investors use to gauge the performance of the U.S. real estate market. As of March 2024, the index’s 10-year average annual return was 6.93%.

Therefore, fundamentally strong REITs, Gaming and Leisure Properties, Inc. (GLPI), VICI Properties Inc. (VICI), and Ladder Capital Corp (LADR) with over 5% dividend yields might be worthy buys for passive income.

REITs create passive income by leasing properties and collecting rent, which forms their main revenue. This income is then distributed to shareholders as dividends. REITs are required to distribute at least 90% of their taxable income to shareholders, often resulting in high and consistent dividend payouts, which can provide a steady income stream.

Moreover, the expansion of e-commerce clearly drives the growing global demand for warehousing and storage facilities, the booming residential sector, and increased government support for infrastructure development. As a result, the REIT market is estimated to grow at a CAGR of 2.8% by 2027.

Considering these conducive trends, let’s take a look at the fundamentals of the three best REIT stocks.

Gaming and Leisure Properties, Inc. (GLPI)

GLPI acquires, finances, and owns real estate properties leased to gaming operators under triple-net lease arrangements, where tenants are responsible for facility maintenance, insurance, taxes, utilities, and other services necessary for the leased properties and the businesses conducted on them.

On July 12, 2024, GLPI announced that it had entered into a binding term sheet with Bally’s Corporation (BALY), pursuant to which the company plans to acquire the real estate assets of BALY’s Kansas City Casino, BALY’s Shreveport Casino & Hotel, and the land under BALY’s permanent Chicago casino. Additionally, it will provide construction financing for BALY’s Chicago Casino Resort, with a total investment of about $1.59 trillion.

GLPI pays a $3.04 per share dividend annually, which translates to a 5.98% yield on the current share price. Its four-year dividend yield is 6.11%. The company’s dividend payouts have grown at a CAGR of 5.1% over the past three years.

In terms of the trailing-12-month gross profit margin, GLPI’s 96.53% is 46.3% higher than the 66% industry average. Its 52.39% trailing-12-month net income margin is 447.2% higher than the 9.6% industry average. Likewise, the stock’s 6.61% trailing-12-month ROTA is 397.5% higher than the 1.33% industry average.

GLPI’s total income from real estate for the fiscal second quarter that ended June 30, 2024, increased 6.5% year-over-year to $380.63 million. Net income attributable to common shareholders and earnings per share stood at $208.25 million and $0.77, up 33.8% and 30.5% year-over-year, respectively.

For the third quarter ending September 2024, GLPI’s revenue is expected to increase 7.2% year-over-year to $385.28 million. Its FFO for the same quarter is expected to increase 3.2% year-over-year to $0.97. GLPI surpassed the consensus revenue estimates in each of the trailing four quarters. 

The stock gained 14.6% over the past three months to close the last trading session at $50.85.  

GLPI’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.    

GLPI also has a B grade for Momentum, Stability, and Quality. It is ranked #8 in the 45-stock REITs – Diversified industry. 

Beyond what is stated above, we’ve also rated GLPI for Growth, Sentiment, and Value. Get all GLPI ratings here.

VICI Properties Inc. (VICI)

Real estate investment trust VICI owns one of the largest portfolios of market-leading gaming, hospitality, and entertainment destinations, including Caesars Palace, MGM Grand, and The Venetian Resort in Las Vegas.

It owns 93 assets across the United States and Canada, including 54 gaming properties and 39 other experiential venues. The company’s portfolio spans 127 million square feet and features around 60,300 hotel rooms and over 500 restaurants, bars, nightclubs, and sportsbooks.

On September 5, 2024, VICI declared a regular quarterly cash dividend of $0.4325 per share of common stock for the period from July 1, 2024, to September 30, 2024, representing an annualized amount of $1.73 per share and a 4.2% increase from the current dividend rate. The dividend will be payable on October 3, 2024.

VICI’s annual dividend rate translates to a yield of 5.27% at the current share price. Its four-year average dividend yield is 4.90%. Also, the company’s dividend payouts have increased at a CAGR of 7.5% over the past three years.

VICI’s trailing-12-month EBIT margin of 92.66% is 325.9% higher than the 21.76% industry average. Moreover, its trailing-12-month net income margin of 70.38% is 635.1% higher than the 9.57% industry average.

VICI’s total revenues for the second quarter that ended June 30, 2024, increased 6.5% year-over-year to $957 million. For the same quarter, the company’s adjusted EBITDA came in at $775.87 million, up 7.3% year-over-year. Its FFO per common share for the period increased 2.9% from the year-ago value to $0.71.

For the third quarter ending September 2024, VICI’s revenue is expected to increase 5.5% year-over-year to $954.21 million. Its FFO for fiscal 2024 is expected to increase 5.3% year-over-year to $2.61. Over the past three months, VICI’s stock has gained 16.7% to close the last trading session at $32.81.

VICI has an overall B rating, equating to a Buy in our proprietary rating system. VICI also has a B grade for Momentum and Quality. It is ranked first out of 16 stocks in the REITs – Hotel industry. 

To see additional POWR Ratings for Value, Stability, Sentiment, and Growth, click here.

Ladder Capital Corp (LADR)

LADR operates as an internally managed real estate investment trust. It functions through three segments: Loans; Securities; and Real Estate.

In terms of the trailing-12-month gross profit margin, LADR’s 75.44% is 26.3% higher than the 59.72% industry average. Similarly, its 1.97% trailing-12-month Return on Total Assets is 86.4% higher than the 1.06% industry average. Its 38.20% trailing-12-month net income margin is 69.8% higher than the 22.50% industry average.

Its annual dividend is $0.92, which translates to a yield of 7.53% at the current share price. Its four-year average dividend yield is 8.18%. Its dividend payouts have increased at a CAGR of 4.8% over the past three years.  

For the second quarter that ended on June 30, 2024, LADR’s net interest income came in at $37.14 million. Likewise, its distributable earnings and distributable EPS came in at $40.40 million and $0.31, respectively. In addition, the company’s cash and cash equivalents stood at $1.20 billion as of June 30, 2024, compared to $1.01 billion as of December 31, 2023.

Street expects LADR’s revenue for the quarter ending December 31, 2024, to increase 21.5% year-over-year to $73.52 million. Its EPS for fiscal 2025 is expected to increase 5.9% year-over-year to $1.30. It surpassed Street EPS estimates in each of the trailing four quarters.

Over the past six months, the stock has gained 10.4% to close the last trading session at $12.22.

LADR’s POWR Ratings reflect its positive outlook. It has an overall rating of B, equating to a Buy in our proprietary rating system. Within the REITs – Diversified industry, it is ranked #3 out of 45 stocks. It has a B grade for Momentum, Sentiment, and Quality.

 Click here to see LADR’s Growth, Value, and Stability ratings.

What To Do Next?

43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.

2024 Stock Market Outlook >

GLPI shares were trading at $50.58 per share on Friday afternoon, down $0.27 (-0.53%). Year-to-date, GLPI has gained 7.56%, versus a 20.05% rise in the benchmark S&P 500 index during the same period.

About the Author: Nidhi Agarwal

Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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