JPMorgan Goes Overweight Gaming REIT, Says Gaming & Leisure Dividend Is 'Safe'

Geographic diversification limits the impact of a decline in any one regional market on the performance of Gaming and Leisure Properties Inc GLPI. JPMorgan’s Joseph Greff reinitiated coverage of the company with an Overweight rating and a price target of $39.

Dividend Safe

At the current level’s, Gaming and Leisure’s stock offers “an attractive and relatively safe dividend yield,” analyst Joseph Greff mentioned, while adding that this is supported by the REIT’s “increasingly diverse base of regional properties.” Moreover, Gaming and Leisure’s stock is attractive in relation to other triple net lease [TNL] REITs.

Greff expects 80 percent of AFFO to continue to be deployed into dividend and dividend growth, and believes that the other 20 percent of AFFO would be used to improve balance sheet leverage. Gaming and Leisure’s yearend 2017 net leverage estimate is at the lower end of other TNL REITs.

Geographic Diversification

Gaming and Leisure has a presence in more than 20 markets, and no property represents more than 8 percent of property GGR. “We think this increased diversification will serve to limit the effect of a decline in any one regional market,” the analyst wrote.