Why Chasing High-Yield REITs Is Both a Jolly Jape and a Secret Hedge

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There comes a time in every investor’s life—usually after the third or fourth cup of tepid office coffee—when the prospect of passive income looms rather more alluringly than the usual spreadsheet stodge. Let us suppose, dear reader, that you stand at the threshold of August with a spare thousand simoleons jangling in your pocket and a beguiling urge to watch that sum multiply, or at very least, to generate some coinage for the annual martini fund.

Dividend Stock Amount Invested Recent Yield Annual Dividend Income
EPR Properties (EPR) $500 6.42% $32.10
Vici Properties (VICI) $500 5.29% $26.45
Total $1,000 5.85% $58.55

Now then—before you go dashing off to the races, do recall that the well-worn path to financial felicity is chock-full of detritus, the odd banana peel, and the carelessly discarded prospectus. So let us cast a gimlet eye over two wondrously high-yielding chaps: EPR Properties and Vici Properties—entities whose very names ring with the promise of stable dividends and boardroom shenanigans galore. Most conventional types will land upon these tickers with the fervour of a Labrador at a duck pond. Yet, as a contrarian of the old school, I sniff opportunity hiding behind the massed ranks of doubters and armchair Cassandras. And really, there’s nothing quite so delicious as wading into a market other investors have declared “a bit too rich for my blood.”

EPR Properties: Or, The Case of the Perpetually Entertaining Tenant

Picture, if you will, EPR Properties as a genial sort, keen on inviting friends over for the sort of bash that results in billiard cues strewn artfully across the carpet and martini stains on the chesterfield. EPR’s passions are firmly experiential—movie palaces, eat-and-play venues, unflappable health temples, and raucous attractions. One can imagine the board grumbling over popcorn futures in a meeting last quarter.

EPR’s secret weapon—its Jeeves, if you will—is the triple net lease. This delightful bit of contractual hocus-pocus ensures that tenants (those devil-may-care commercial operators) pick up the cheque for taxes, maintenance, and insurance. One almost feels the board should write them a thank-you note. With $5 to $5.16 per share anticipated in adjusted Funds From Operations (FFO) for the year, EPR is in rather less danger of missing its monthly dividend of $0.295 than Bertie Wooster is of missing tea.

True to form, the company has been gleefully flinging $86.3 million at new properties during the first act of this year, including mysterious plots of land in Georgia and Virginia—one can only imagine the local estate agents rubbing their hands in glee. This flurry of activity, ostensibly designed to keep the dividend flowing in a manner most agreeable, is projected to reach $300 million should the mood prevail. The dividend already received a dainty 3.5% nudge upwards, no doubt to the delight of income-seekers everywhere.

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Yet the plot thickens with contrarian overtones. When you next hear some risk-averse cousin declare REITs “too exposed to consumer whimsies,” reflect on the curious resilience of those experiential assets. In lean times, the masses still crave escape—or, at the very least, a well-buttered tub of popcorn.

Vici Properties: A Gaming Baron in Impeccable Morning Dress

And then there is Vici, which struts through the landscape with all the élan of a casino-owning aristocrat who tips the croupier in gold sovereigns. Proprietor of such humble establishments as Caesars Palace, MGM Grand, and the Venetian, Vici is not so much a property company as a collector of legendary excess and velvet rope exclusivity.

Its own Jeevesian stratagem? Long-term, inflation-linked triple net contracts, some stretching further into the future than the average family feud. At present, a comforting 42% of rental contracts float gently on the sea of inflation indices—a figure that may ascend to a positively anachronistic 90% by 2035. There’s a sort of stately inevitability to such arrangements, as if even the harshest market squall would fail to dislodge the butler’s white gloves.

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With $1.73 paid out per share annually and $2.35–$2.37 of adjusted FFO pouring in, Vici’s dividend appears downright over-collateralized—a rare thing in polite society or the stock market. The avowed plan is to reinvest in ever more audacious projects, such as funding a $510 million casino deal in California (sure to provoke envy at the next shareholders’ soirée), not to mention $450 million in One Beverly Hills, a plot more exclusive than Aunt Agatha’s breakfast table.

Vici boosts its payout the way Jeeves refreshes the master’s cocktail—quietly, efficiently, year after year, with the faintest whiff of superiority. Seven increases in as many years, and a 7.4% average annual compounding, suggest the risk-averse are missing a rather splendid party.

When the Herd Sniffs Danger, The Contrarian Smells a Bargain

So, is all of this a trifle reckless? To the conventional mind, perhaps. The crowd wrings its hands over economic malaise, cap rates, and supposed consumer exhaustion. The contrarian, however, pounces when hope is in short supply and the clever money is sloshing elsewhere. These REITs, often derided in breathless headlines, have quietly made off with the silverware, delivering stable yields and a briskly rising dividend year after year.

Thus, should you find yourself with a spare $1,000 and a thirst for passive income with personality, don’t let the dour prognosticators temp your courage. The world will always need amusement, excess, and a well-poured drink. Invest with the contrarian’s twinkle, and never underestimate the power of buying the nightclub when the world thinks the party is over. 🍸

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2025-08-03 00:39