Gaming and Leisure Properties Gives Investors Something to be Thankful For: A Higher Dividend

Posted on: November 27, 2019, 12:41h. 

Last updated on: November 27, 2019, 01:15h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Gaming and Leisure Properties, Inc. (NASDAQ:GLPI) gave its shareholders a pre-Thanksgiving gift Wednesday in the form of a higher dividend.

The gaming real estate investment trust (REIT) said today it’s boosting its quarterly payout by almost three percent to 70 cents per share, up from the current rate of 68 cents.

With the new dividend, shares of GLP yield 6.61 percent, based on the $42.35 handle at which the stock trades at this writing. A stock’s dividend yield is determined by dividing its annual payout by the price where the shares reside at. At a rate of 6.61 percent, shares of GLP yield more than triple 10-year Treasuries and the S&P 500, and more than double the widely followed MSCI US Investable Market Real Estate 25/50 Index.

The dividend is payable on December 27, 2019 to shareholders of record on December 13, 2019,” said GLP in a statement.

Pennsylvania-based Gaming and Leisure owns 43 casinos in 17 states.

Steady Dividend Growth

REITs, including GLP, often sport above-average yields, because for companies to gain the tax benefits of that classification, they must pay out at least 90 percent of earnings in the form of dividends. Those higher yields prompt many in the investment community to view REITs as a defensive asset class and alternatives to fixed income instruments.

While high yields often lure investors, a more telling sign regarding the soundness of a company’s balance sheet and management team is dividend growth, something GLP has delivered since being separated from Penn National Gaming (NASDAQ:PENN) in 2013.

The dividend hike announced by GLP today is the sixth since the company went public. The gaming REIT delivered its first quarterly payout in March 2014, and over that time, the dividend has grown by 34.6 percent.

“While the Company intends to pay regular quarterly cash dividends for the foreseeable future, all subsequent dividends will be reviewed quarterly and declared by the Board of Directors at its discretion,” according to the firm.

Penn National is GLP’s primary tenant, but the real estate company does own other properties managed by other gaming companies. For example, GLP owns the real estate assets of the Tropicana in Atlantic City, N.J., which is managed by Eldorado Resorts.

Joining Rivals

With news of GLP’s dividend hike out Wednesday, each of the three publicly traded, domestic gaming REITs have increased payouts in 2019.

In September, GLP rivals MGM Growth Properties (NYSE:MGP) and Vici Properties (NYSE:VICI) both announced higher dividends.

MGP often announces modest dividend hikes over the course of a year, while GLP and Vici usually reveal one, larger-scale increase on an annual basis.

Shares of MGP and Vici yield 6.08 percent and 4.84 percent, respectively.