My Top Dividend Stock To Buy In January
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My top dividend stock to buy in January hits close to home—literally. And this is also one we’ve talked about before.
It was my top dividend stock to buy in July, and now, after a 10% drop in share price just in the last month, it’s back on my radar as we head into the New Year. Once again, we’re talking about VICI Properties (VICI).
As a quick refresher, VICI is one of the world’s largest experiential real estate companies. They own a portfolio of iconic properties in top gaming, hospitality, entertainment, and leisure destinations—including Las Vegas.
Their portfolio of properties is like a “greatest hits” of the Las Vegas Strip. We’re talking about Caesars Palace, the Venetian, the Mirage (soon to become the Hard Rock), MGM Grand, Park MGM, Mandalay Bay, New York-New York, Excalibur, and Luxor—all one-of-a-kind properties in a city unlike any other on Earth.
Source: Investor Presentation
I started a position in VICI earlier this year at an average cost per share of just under $28. Fortunately, I was able to build my position up to 100 shares—and wanted to keep adding from there—but the market gods had other plans.
Soon after I started building my stake, the share price surged into the mid-$30s. While that made my timing look great, it also left the stock temporarily outside of buying range.
Fast forward to today, though, and we’ve been blessed with another buying opportunity. As mentioned, the share price is down more than 10% in the last 30 days, leaving it down over 4% here in 2024.
On one hand, that’s not great—especially in a year where the S&P is up nearly 30%. But for dividend investors like you and me, this kind of pullback is precisely what we want to see, and it’s allowed me to start buying shares again.
At the time of writing, VICI’s share price has shrunk to around $29, with a dividend yield close to 6%. On top of that above-average yield, they’ve delivered an impressive 8.3% dividend growth rate over the past five years, making VICI double-trouble in the dividend department.
Source: Snapstock
Now as dividend investors, we’re no strangers to the idea of “buying the dip,” but it’s not always as simple as swooping up shares just because they’re down. An important question we always need to ask is: Why?
Why is the share price down? Because not all dips are created equal. Some create opportunities, while others are warning signs.
In VICI’s case, the current dip doesn’t appear to be a result of any fundamental issues in the business. From what I can see, this pullback is more so driven by macroeconomic factors—specifically, interest rates.
While rates have started to come down, the Federal Reserve recently announced plans for fewer rate cuts than anticipated next year. That news put downward pressure on REITs like VICI, as higher rates make it more expensive for them to borrow money—which they do a lot of to buy more properties.
Still, we dividend investors can rejoice in these moments. Lower prices help our investment dollars go farther, and we can lock in higher yields on discounted stocks like VICI.
With that said, it looks like there are quite a handful of good buying opportunities on the market right now, so I’d love to hear from you: which discounted stocks do you have your eyes on as we head into 2025? Write to me here and let me know.
And if you want to learn about my dividend investing strategy and goals for the New Year, I’m telling you all about that here.
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IN MY PORTFOLIO 📈
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ICYMI 🎥
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CAREFULLY CURATED 🔍
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🎧 The Rat Man - The origin story of Rollins Inc. (ROL), also known as my "Great White Whale."
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SINCE YOU ASKED 💬
"SCHD pays a dividend of 3.4% and it has a dividend increase of 12%...3.4% + 12% = 3.8%. Why is that good?"
- Ray | Email Submission
This is a great question, and I think this touches on an important concept in dividend investing that often gets misunderstood.
At first glance, that 3.8% figure might not seem all that impressive, but your calculation is only taking one year into account. Dividend investing is a long-term game, so you need to think beyond just one year and consider the power of compounding over time.
Looking beyond just one year, if you were to hold SCHD for a decade, and if it continued to grow its dividend at the same rate, your yield on cost—the yield based on the price you originally paid—doesn’t stay at 3.4% or 3.8%. By the 10th year, it climbs to a whopping 9.4%.
In other words, you’re earning nearly 10% on your original investment every year, just in dividends.
With that, if you extend that timeline out another 10 years, your yield on cost would skyrocket to 29.3%. That means for every $1,000 you initially invested, you’d be receiving $293/year in dividends by year 20, assuming that 12% growth holds—not too shabby.
This is why you need to look beyond the starting yield and beyond a one-year time horizon. A high-yield stock that doesn’t grow its dividend might pay you more in the short term, but over time, a stock or ETF with a lower starting yield and strong dividend growth can offer a lot more than the high-yielders.
Plus, that growing dividend can help you keep pace with (or outpace) inflation—something a stagnant dividend can’t do.
Have a question? Ask me here to see it featured in an upcoming newsletter.
LAST WORD 👋
Wow—here we are, the final newsletter of 2024.
As I think back on the past year, I want to take a moment to thank you—whether you've been a longtime supporter or just recently joined, I can't tell you how much I appreciate all of your support.
I feel incredibly fortunate to do what I do with this YouTube and newsletter stuff. If you had told me five years ago that someday soon I'd be making a (modest, yet growing) living talking about investing on the internet, I would've thought you were out of your mind.
This has been one of the greatest surprises of my life, and I still can't believe that I get to spend my days talking about something I love and sharing it with people like you. This may sound cliché, but it’s the truth: none of this would be possible without your support. From the bottom of my heart, thank you for everything.
Wishing you and your family a happy and safe New Year. 2024 was a good one, now let's have another!
