This Sleepy Casino REIT Is an Income Lover's Dream

In the search for equity income, many investors turn to real estate dividend stocks. Just look at the Vanguard Real Estate Index Fund ETF. The largest exchange-traded fund (ETF) in the category yields 3.66%, or more than triple the yield on the S&P 500.

With some homework, investors can boost their real estate equity income propositions. Gaming and Leisure Properties (NASDAQ: GLPI) confirms as much. This REIT, which yields an impressive 6.59%, isn't a casino stock in the traditional sense, but it counts some of the most recognizable gaming operators among its tenants.

For dividend investors, there's a lot to like about this casino landlord. Image source: Getty Images.

Experienced REIT investors may be familiar with Vici Properties, Gaming and Leisure's more prominent rival. They're sort of like the Coca-Cola and PepsiCo of casino REITs, but their operating models differ, and those differences could spell opportunity for GLPI.

A safer casino bet

Importantly, investors don't have to stretch too far into the past to find sources of allure with this gaming REIT. The company reported first-quarter results last week, and not only did its adjusted funds from operations (AFFO) slightly beat Wall Street estimates, but the REIT also raised its 2026 guidance.

Yes, AFFO is among the laundry list of investing acronyms market participants need to know. Still, in simple terms, it's a vital gauge of a REIT's financial health, including its ability to sustain and grow dividends. One way of looking at Gaming and Leisure's increased AFFO guidance is that the aforementioned 6.59% dividend yield isn't a yield trap, and the payout increase streak that currently spans five years has the potential to grow.

Regarding dividend safety, this gaming REIT concluded the first quarter with liquidity of $2.4 billion, including $275 million in cash, and with spending unlikely to exceed $850 million this year, the property owner probably won't be heading to capital markets to take on more debt.

Second, Penn Entertainment (NASDAQ: PENN), the company from which Gaming and Leisure was spun out nearly 13 years ago and the REIT's largest tenant, posted its own set of strong first-quarter results. In fact, it was Penn's brick-and-mortar casinos in the Midwest, South, and West, the property assets of which are owned by GLPI, that were the primary sources of strength. Translation: The REIT's biggest tenant can cover its rent obligations.

GLPI doesn't need Las Vegas

Investors new to real estate investing should consider the differences between REITs that appear similar on the surface. As noted earlier, there are differences between Gaming and Leisure and its primary competitor, Vici. Namely, Vici is the largest owner of Las Vegas Strip real estate, while GLPI isn't going out of its way to add Sin City exposure.

Gaming and Leisure owns the land on which a pro baseball stadium is being built, as well as the site formerly occupied by the Tropicana, so the U.S. casino hub will be a contributor to the REIT's growth story, but a modest one at that.

That's by design. Management has long preferred the relative dependability of regional markets, believing those are safer places to allocate capital than Las Vegas. So it can be said that Gaming and Leisure is a good steward of investor capital, and with safety being the name of the dividend-investing game, that point shouldn't be overlooked.

Todd Shriber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Real Estate ETF. The Motley Fool recommends Gaming And Leisure Properties and Vici Properties. The Motley Fool has a disclosure policy.