2 Surefire Dividend Stocks to Buy for the Long Haul

As interest rates decline, the article identifies AT&T and Vici Properties as compelling dividend plays for income investors seeking stable returns. AT&T is noted for its simplified business model, robust 5G and fiber subscriber growth, strong free cash flow adequately covering its 4.3% dividend yield, and an attractive valuation. Vici Properties, an experiential REIT, offers a 5.8% yield, maintains 100% occupancy with long-term, CPI-linked leases to major gaming tenants, and is positioned to benefit from lower interest rates and an improving macro environment. Both companies are presented as having sustainable dividends and favorable valuations for the current market cycle.

Analysis

The current market environment, marked by declining interest rates, is prompting a rotation back into blue-chip dividend stocks from risk-free assets. AT&T (T) exemplifies this trend, having strategically divested media assets to simplify its business and focus on high-growth 5G wireless and fiber segments. This pivot has resulted in robust subscriber gains, including 1.7 million wireless postpaid subscribers in both 2023 and 2024, alongside significant fiber connection additions.

AT&T demonstrated strong free cash flow (FCF) growth, rising 18% to $16.8 billion in 2023 and 5% to $17.6 billion in 2024. While 2025 FCF is projected to dip to the low-to-mid $16 billion range due to increased investments, it comfortably covers the $8.2 billion dividend, yielding 4.3%. Analysts anticipate a 3% adjusted EBITDA CAGR from 2024-2027, with the stock trading at an attractive valuation of less than 7 times this year's adjusted EBITDA.

Vici Properties (VICI), an experiential REIT, presents another compelling dividend opportunity with a 5.8% forward yield. Its business model is fortified by 100% occupancy since its 2018 IPO and long-term, CPI-linked leases with major gaming tenants, providing inflation protection. Vici expects its adjusted funds from operations (AFFO) per share to grow 4%-6% in 2025, easily covering its dividend, and trades at 13 times this year's AFFO per share.

Declining interest rates are expected to further benefit Vici by reducing acquisition costs for new properties, while a warmer macro environment should bolster the gaming and resorts market. Both AT&T and Vici exhibit strong fundamental characteristics, including sustainable dividend payouts, favorable valuations, and clear growth drivers, positioning them as attractive options for income-focused institutional investors.

Key Decisions for Investors

• Consider initiating or increasing positions in AT&T (T) and Vici Properties (VICI) for stable income generation and potential capital appreciation, given their strong fundamentals and attractive valuations.
• Monitor AT&T's FCF trajectory in 2025, particularly the impact of increased investments and tax rates, to ensure continued dividend coverage and future growth prospects.
• Evaluate Vici's acquisition pipeline and the broader macro environment's effect on gaming and resort tenant performance, as these factors could further enhance its AFFO growth and dividend sustainability.