Vici Properties (VICI -0.65%), a real estate investment trust (REIT) that owns casinos and entertainment properties across the U.S. and Canada, is often considered a reliable stock for income investors. Its stock price stayed nearly flat over the past three years, but it delivered a total return of nearly 20% after including its reinvested dividends.

Vici, like many other REITs, struggled to attract new investors as interest rates rose. But will its stagnant stock head higher over the next three years as interest rates finally decline?

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What happened to Vici over the past few years?

As an experiential REIT, Vici buys up properties; leases them to gaming, hospitality, and entertainment companies; and splits its rental income with its investors. Like other REITs, it must pay out at least 90% of its pre-tax income as dividends to maintain a favorable tax rate.

Its top tenants include Caesar's Entertainment, MGM Resorts, Penn Entertainment, and Century Casinos. Three of the Las Vegas Strip's biggest casino resorts -- Caesars Palace, MGM Grand, and the Venetian -- are locked into its leases.

Vici's heavy exposure to the gaming sector might seem risky, but it locks its tenants into multi-decade leases that are mostly linked to the Consumer Price Index (CPI). Vici's tenants can't abruptly break those contracts, since the complex real estate regulations for the gaming industry make it hard to quickly relocate entire casinos, and its CPI-linked leases guarantee that its rental income keeps pace with inflation. Moreover, it's a triple net lease REIT, which means its tenants are responsible for covering all of a property's real estate taxes, insurance, and maintenance fees.

That's why Vici has maintained a perfect occupancy rate of 100% ever since its IPO in 2018 -- even as the COVID-19 pandemic, inflation, and other macro headwinds rattled the gaming and hospitality industries. It's also consistently grown its adjusted funds from operations (AFFO) per share, even as it acquired more properties.

Data source: Vici Properties.

For the full year, Vici expects its AFFO per share to rise 5% to $2.25-$2.26. At $29 per share, its stock looks like a bargain at 13 times the midpoint of that estimate.

Vici currently pays an attractive forward dividend yield of 6% on a quarterly basis. It's raised its dividend ever since its public debut. That high yield and low valuation should limit its downside potential over the next few years.

What will happen to Vici over the next three years?

However, Vici's upside potential might be limited by elevated interest rates and unpredictable macro headwinds over the next three years. The Federal Reserve cut its benchmark interest rates three times in 2024, but it expects just two rate cuts in 2025 -- which indicates inflation hasn't been tamed yet. President-elect Donald Trump's plans to implement higher tariffs on products from China, Canada, and Mexico have also stoked fears of fresh inflationary headwinds over the next few years.

High interest rates will make it more expensive for Vici to buy new properties, and they'll make safer fixed-income investments like CDs, bonds, and T-bills more appealing than riskier dividend-paying stocks. All of those headwinds weighed down Vici and other REITs over the past year, and they'll likely cap its near-term gains.

That said, Vici's business model has been well-insulated from the macro headwinds over the past few years. From 2020 to 2023, its AFFO per share grew at a stable compound annual growth rate (CAGR) of 9.4%.

Assuming Vici can grow its AFFO per share at a CAGR of 9% from 2023 to 2027 and that it maintains the same multiple, its stock could rise 34% from its current price to about $39 by the final year. It will also likely maintain its current streak of annual dividend hikes. That stable growth trajectory makes it a solid stock to buy and hold for long-term dividend investors.