1 Crucial Factor Driving This 5.3%-Yielding Dividend Stock's Unstoppable Growth

Vici Properties (VICI 0.49%) has grown significantly over the years. When it formed in 2017, the real estate investment trust (REIT) owned 20 casino properties leased to several different gaming operators. Today, it owns a diversified portfolio of 93 experiential real estate assets leased to 13 gaming and entertainment tenants.

It also has a large portfolio of real estate-backed loans with other leading experiential operators. That growing portfolio has enabled the company to increase its 5.3%-yielding dividend every single year since its formation (last year was the seventh in a row).

The REIT's unstoppable growth should continue. One crucial reason driving that view is the strategic relationships it has developed with high-quality operators of experiential properties. Those deep relationships have enabled the company to continue making new investments.

Expanding existing partnerships

Vici Properties committed to investing $1.1 billion across three deals at an attractive 8.1% initial yield last year. Two of those investments were with existing partners:

• The Venetian Resort: Vici Properties initially bought all the land and real estate associated with The Venetian Resort for $4 billion in 2021. At the time, it signed a 30-year triple net lease (NNN) with an affiliate of funds managed by Apollo Global Management. That relationship led to a follow-on investment last year. The REIT is providing The Venetian with up to $700 million through its partner property growth fund to finance an extensive renovation of the property. In exchange, it will earn a 7.25% yield on that investment via an increase in the Venetian's rent.
• Great Wolf: In 2021, the company partnered with Great Wolf to help support the development of additional resorts. It expanded that partnership last year by originating a $250 million mezzanine loan collateralized by nine Great Wolf Lodge resorts. It has now committed more than $720 million of capital to the company.

Forming new partnerships

In addition to cultivating existing relationships, the REIT continues to form new partnerships. Last year, it did that with Homefield, agreeing to provide the company with up to $105 million to fund the development of a Margaritaville Resort in Kansas City. As part of that new partnership, Vici Properties has the right to buy several properties developed by Homefield in sale-leaseback transactions, including that resort and a trio of new and existing sports facilities.

Vici Properties recently unveiled its latest relationship-based investment. CEO Ed Pitoniak discussed it on the REIT's fourth-quarter call, stating it was "initiating a new VICI strategic and financial relationship with Cain International and Eldridge Industries through an initial investment in the financing of the One Beverly Hills development."

He noted, "Like most of VICI's growth activities, this VICI investment is a result of our growing a new relationship." He met with the founder of Cain last May, which led them to look for ways to work together. Initially, Vici will provide a $300 million mezzanine loan to help fund the development of One Beverly Hills, a landmark mixed-use development project.

Pitoniak discussed this partnership, stating, "We're excited about the prospect of becoming a long-term partner in their growth. This announcement of our new partnership with Cain and Eldridge represents our first new venture in what we hope will be a year of new investment ventures in both gaming and nongaming."

Poised to continue benefiting from existing partnerships

The REIT's growing list of partnerships provides it with lots of additional growth opportunities to make follow-on investments. For example, it bought 38 bowling entertainment centers from Lucky Strike (formerly Bowlero) in a $432.9 million sale-leaseback transaction in late 2023. As part of that deal, it has the right of first offer to acquire current and future properties for eight years. Lucky Strike currently operates over 360 locations.

Other partnerships include those with casino operators like Caesars and other experiential property operators, such as Canyon Ranch (wellness retreats), Cabot (destination golf), and Homefield. The company can buy properties operated by those companies and fund future development or expansion projects.

Partnering for growth

Vici Properties isn't just a landlord focused on collecting rent. It strives to partner with the companies operating its properties, enabling it to share in their success. As its partners grow, they will offer the REIT new investment opportunities to expand its portfolio. The REIT's growing list of partnerships should enable it to continue increasing its dividend, making it a great option for those seeking a lucrative passive income stream.