This shift suggests global investor sentiment may be changing. The FTSE has been bolstered this year by its high exposure to energy, financials, industrials, and defence – sectors that benefit from higher interest rates, commodity strength, and geopolitical concern. Meanwhile, the S&P 500 has been more exposed to growth and technology names, many of which have come under pressure on valuation concerns, regulatory risk, and weak macro signals in the US.

I wouldn’t say that means the FTSE is in any trouble – rather that the US market is catching up after an unusual period of underperformance.

With the US Federal Reserve expected to cut interest rates this week, the mood has changed. If borrowing costs ease, it often helps companies with heavy debt burdens or those whose growth depends on accessible credit.

All signs point toward a 25-basis point rate cut. This is driven by weak labour data and inflation pressures that are easing but still present. For an investor, this could mark the start of a looser monetary policy environment. However, much depends on how persistent inflation proves, and how clearly the Fed conveys its trajectory for future rate moves.

S&P 500 firms in the real estate investment trust (REIT) sector, financials, and consumer discretionary are among those likely to gain from this shift in policy.

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An S&P 500 stock that could benefit

One S&P 500 stock that could benefit is VICI Properties (NYSE: VICI), a REIT focused on gaming, hospitality, entertainment. and leisure properties. I think it’s a good stock for investors to consider when thinking about rate cuts.

VICI currently offers a dividend yield of 5.5% with a payout ratio of around 66%. This suggests it has sufficient earnings to continue covering payments. This is reflected in its profitability, with a net margin estimated to be above 70% in recent reporting. 

The balance sheet also seems manageable, with a low debt-to-equity ratio and steady revenue growth. Notably, with $46bn in assets, it’s one of the largest REITs in the US.

Naturally, it faces some REIT-related risks. The business depends on its tenants (casinos, hotels, entertainment) maintaining strong operations. Economic shocks, weak tourism, or regulatory changes could hurt cash flow, leading to disappointing results and a share price dip.

Final thoughts

The S&P 500’s recent nudge past the FTSE 100 reflects changing investor preferences. There’s a move away from purely defensive or value plays toward growth and rate-sensitive names now that the Fed is loosening.

In that environment, REITs like VICI Properties look interesting. While not without risk, I think VICI is one stock that’s well positioned to benefit if rates continue falling. 

For someone building global exposure, combining FTSE-based value/defensive names with a few well-chosen S&P 500 REITs could help balance growth and income in a shifting macro backdrop.

The post The S&P 500 hit a new high this week, overtaking the FTSE 100 for the first time this year appeared first on The Twelfth Magpie.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

VICI isn’t just any REIT. It’s a specialist in owning and managing gaming, hospitality, and entertainment properties. Its portfolio includes many of the most iconic casino resorts on the Las Vegas Strip, such as Caesars Palace and the Venetian. The company essentially acts as a landlord, leasing these vast properties under long-term agreements that provide steady, predictable rental income. This makes it a fascinating candidate for investors seeking robust passive income streams.

A closer look at the numbers

So why is VICI catching my eye? For starters, the dividend yield is a solid 5.2%, comfortably above the S&P 500 average. Its dividend payouts appear sustainable, too, with a payout ratio of 68.3%. That means it retains sufficient earnings to reinvest or manage debts while still rewarding shareholders handsomely. Even better, VICI has now increased its dividend for six years running, at an average annual rate of 5.3%.

It’s also not one of those income stocks that trades at a lofty premium. VICI’s price-to-earnings (P/E) ratio is just 13.34, and its price-to-book (P/B) ratio stands at 1.33. That’s a modest valuation for a company delivering both growth and stable dividends.

Looking at the balance sheet, VICI appears well-managed. It holds £45.53bn in assets, balanced against £17.43bn in debt, giving it a debt-to-equity ratio of just 0.67. For a property-heavy REIT, this level of gearing seems quite reasonable.

It’s also a highly profitable business, with a return on equity (ROE) of 10.12% and a remarkable net margin of 67.8%. That means a significant portion of its revenue drops through to the bottom line, helping underpin those generous payouts.

The risks worth keeping in mind

Of course, no stock comes without risk. For VICI, one concern is sector concentration. With so much exposure to gaming and hospitality – and particularly Las Vegas – the company could be vulnerable if consumer spending weakens or tourism slows. Rising interest rates also pose a challenge for all REITs, as higher borrowing costs can squeeze margins or reduce the attractiveness of future acquisitions.

Then there’s the property market itself. While VICI’s long-term leases provide stability, changes in property valuations could impact the company’s balance sheet and investor sentiment. In addition, regulatory risks tied to the gaming industry are always worth watching.

Is it worth buying?

I believe VICI is a compelling stock to consider for investors looking to diversify their income portfolios with US real estate exposure. Its high dividend yield, steady growth, sensible payout ratio, and attractive valuation make it stand out in a market where many S&P 500 shares trade at far steeper multiples.

For me, it might not quite be the absolute best income stock on the S&P 500, but it’s certainly one of the more interesting REITs I’ve come across lately. As part of a well-diversified portfolio, it could prove to be a rewarding long-term holding.

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