Gaming and Leisure Properties Boosts Dividend, Unveils Special Payout

Posted on: February 23, 2023, 05:30h. 

Last updated on: February 23, 2023, 05:30h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Gaming and Leisure Properties (NASDAQ:GLPI) today announced that it is increasing its quarterly dividend while unveiling a special payout.

GLPI dividend
Tropicana Las Vegas. The sale of the venue allowed Gaming and Leisure Properties to raise its dividend. (Image: Bally’s)

The casino landlord raised its quarterly payout to 72 cents a share from 70 cents and said will deliver a special dividend of 25 cents per share, the latter of which is attributable to sale of the property assets of the Tropicana on the Las Vegas Strip. The dividends will be paid on March 24 to shareholders of record on March 10.

Our tenants’ strength, combined with GLPI’s balance sheet and liquidity, position the company to consistently grow its cash flows and build value for shareholders in 2023 and beyond,” said GLPI CEO Peter Carlino in a statement.

The gaming real estate investment trust (REIT) reported fourth-quarter earnings today, noting it generated funds from operations (FFO) of 89 cents a share in the final three months of 2022 on revenue of $336.4 million. Analysts expected FFO of 87 cents on revenue of $335.17 million.

Gaming and Leisure Has Resources for Dividend Growth

Like rival VICI Properties (NYSE: VICI), Gaming and Leisure has an established track record of dividend growth. The REIT also has a history of distributing special payouts, having done just that in January 2022 to the tune of 24 cents a share.

Pennsylvania-based GLPI has $6.12 billion in long-term debt of which just $900 million is coming due in either 2023 or 2024. However, the REIT had $10.93 billion in assets, including cash and cash equivalents north of $239 million, at the end of 2022. That strong asset base and decent cash position are signs the company has the resources to sustain and potentially grow dividends.

That’s crucial because in order for a corporation to gain the preferential tax treatment afforded by the REIT designation, it must distribute at least 90% of its annual taxable income in the form of dividends.

“A dividend is any distribution of cash or property made by a corporation to its shareholders out of its earnings and profits from the current taxable year and then from accumulated earnings and profits from prior years. If there are no earnings and profits available for a distribution, the distribution is considered a return of capital for the shareholder and is therefore nontaxable to the extent the shareholder has basis in the REIT shares,” according to RSM.

Why GLPI Dividend Hike Matters

When accounting for the quarterly dividend increase, GLPI’s annual payout will rise to $2.88 a share. Based on the February 23 closing price of $52.50, the new dividend boosts the yield on the stock to 5.48%.

That’s more than double the trailing 12-month dividend yield found on the Dow Jones U.S. Real Estate Capped Index and well above the yield offered by 10-year Treasuries.

Penn Entertainment is GLPI’s largest tenant and other clients include Bally’s, Boyd Gaming, Caesars Entertainment and Cordish Cos.