High Dividend Stocks: Gaming & Leisure Properties, Inc. (NASDAQ:GLPI)
By: Ned Piplovic,
Image Source: Corporate Earnings Presentation 2019
With a current dividend yield of 6.7%, Gaming & Leisure Properties, Inc. (NASDAQ:GLPI) — a gaming-focused real estate investment trust (REIT) — is indeed one of the high dividend stocks that offer double-digit-percentage total returns in addition to a significant dividend income.
Prominent income distributions are a main characteristic of high dividend stocks. However, even income investors require that at least moderate share price growth accompanies the substantial dividend distributions. Otherwise, declining share prices can offset the dividend income increases to deliver overall losses, which makes even high dividend stocks poor investment choices.
While experiencing moderate volatility over the past few years, Gaming & Leisure Properties’ share price did gain 60% since the beginning of 2016 to accompany the dividend income growth and deliver robust returns on shareholders’ investment.
Gaming & Leisure Properties, Inc. (NASDAQ:GLPI)
Headquarters in Wyomissing, Pennsylvania, and incorporated in 2013, Gaming and Leisure Properties, Inc. (GLPI) is a self-administered and self-managed Pennsylvania REIT. The company became the first gaming-focused REIT in North America when it elected to be treated as REIT for U.S. federal income tax purposes for the 2014 tax year. Gaming and Leisure Properties focuses primarily on acquiring, financing and owning real property for leasing to gaming operators in “triple net” lease arrangements. The company’s current portfolio comprises 46 gaming and related facilities, which are geographically diversified across 16 states. Gaming and Leisure Properties operates two of the locations — Hollywood Casinos in Baton Rouge and Perryville, Louisiana — and leases the remaining 44 properties to outside gaming and leisure operators. Some of the REIT’s more recent acquisitions include the purchase of all real estate assets of Pinnacle Entertainment, Inc. in 2016, as well as the acquisition of five casino properties from Tropicana Entertainment, Inc. for nearly $1 billion in 2018. In addition to further acquisition of similar properties, the company also plans to diversify its portfolio over time by acquiring properties outside the gaming industry.
High Dividend Stocks: Gaming & Leisure Properties Dividends
Gaming & Leisure Properties’ current $0.68 quarterly dividend distribution represents a boost of nearly 8% more the $0.63 quarterly payout from the same period one year earlier. This new quarterly payout amount is equivalent to an annualized total distribution of $2.72 and a 6.7% forward dividend yield. Even with a 60% asset appreciation since January 2016, that suppressed the overall distribution yield rate, the current 6.7% yield is still in line with the company’s 6.68% average yield over the past five years.
In addition to mirroring the company’s own long-term average, the current yield is also more than twice the 3.08% simple average yield of the overall Financial sector. Furthermore, Gaming & Leisure Properties’ current yield is 64% higher than the 4.07% simple average of the company’s peers in the Diversified REITs industry segment, as well as in line with the 6.74% average yield of the segment’s only dividend-paying equities.
Since beginning dividend distributions in 2014 — as required by law to enjoy the favorable taxation status — the REIT distributed, and boosted, its annual distribution every year. Over the past five years, Gaming & Leisure Properties has enhanced its total annual payout amount 31%. This level of advancement corresponds to an average growth rate of 5.5% per year.
High Dividend Stocks: Gaming & Leisure Properties Share Price
The share price entered the trailing one-year period on the tail end of a 12-month downtrend that began in mid-2017. Continuing the downward trend, the share price deteriorated almost 11% in the second half of 2018. By December 24, 2018, the share price dropped to its two-year low of $31.52.
However, immediately after bottoming out on Christmas Eve, the share price reversed direction and embarked on a rising trend of fast recovery. In less than four weeks, the share recovered all its losses since the beginning of the trailing 12 months and continued reaching for new highs.
The share price continued advancing before closing at the end of trading on June 20, 2019, at $40.73. This closing price marked a new high in more than five years. In addition to reaching a new peak in many years, the June 20 closing price was 15.4% higher than at the beginning of the trailing 12-month period, as well as nearly 30% above the two-year low in late December 2018. Because the share price was coming down from its all-time high of more than $50 in early 2014, the June 20 closing price was only 23% higher than it was five years ago.
However, the high-dividend income distributions managed to combine with the overall share price uptrend to offer shareholders robust return even over the past five years. However, the 15%-plus one-year asset appreciation and the 6.7% dividend income yield came together to deliver a total return of nearly 23% just over the trailing 12 months. Over the past three years, Gaming & Leisure Properties’ shareholders enjoyed a total return of more than 37%. Lastly, even with a moderate 23% gain, the share price capital gains combined with the dividend distributions for a total return on shareholders’ investment of almost 60% over the past five years.
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