VICI is undervalued with ~27% upside to $33; dividend is covered and AFFO grows, though tenant privatization reduces cash flow predictability.

And now we get to what is perhaps one of the most interesting investment cases right now, and that's VICI Properties, stock ticker VICI, down 20% in the last year, year-to-date down by 7.29% trading at $26 a share, right at their 52-week low.

But, look at the 5-year chart, now down by about 12%. Now, of course, that's not including the dividends paid out during that time, which would give them a total positive return, which would give them a positive total return, but even at these prices, they're trading close to around a 7% yield, which is certainly quite a bit higher than the historic average.

The highest yield really they've seen in the company's entire history, with the exception of 2020.

So, what's going on with VICI? Well, real quick, if you aren't aware, I actually interviewed the CEO last week and got some incredible insights into VICI stock. If you haven't watched that interview, be sure to check out Be sure to check it out on the Mispriced Podcast here on YouTube.

It's the best breakdown of VICI stock that you'll see on the internet. I'll leave a link to it in the description and in the pinned comment.

But, there's a couple of key takeaways you have to understand about VICI right now. Now, if you aren't familiar, keep in mind the vast majority of their rent roll. Yes, this is a REIT.

Their rent roll comes from Las Vegas. In fact, their top two tenants make up 70% of their rent roll. So, obviously, there is some customer concentration risk.

But here's the really good news. What we can see right now is adjusted funds from operations, which is the ultimate measure of intrinsic value for REITs, and it tells you whether or not the dividend sustainable, adjusted funds from operations per share is easily covering those dividend payments right now.

So, the dividend looks very well covered. The payout ratio is sitting at about 75%.

And from what management is guiding towards adjusted funds from operation should continue to grow at about 3.4% over the next year. So, what does that tell us? Well, if they're growing adjusted funds from operations per share at about 3%, and their payout ratio is currently in line with their target of about 75%, then hypothetically, we should see dividend growth of around 3% as well.

Now, that's interesting because with that information, we can back into a fair value. So, if we jump over to our valuation sheet and look at our dividend discount model, this is where things will start to get a bit more interesting.

If they can actually grow those dividends at 3% moving forward, you can see fair value is $33 a share implying around 27% upside from its current prices.

So, why is this the case? Why is the market mispricing this stock by so much right now? Well, ultimately, it boils down to one thing. Because on the podcast, we discussed three potential concerns the market has.

Traffic to Las Vegas, the rise of online gaming, but also their two tenants, Caesars and MGM.

Their CEO pointed out that traffic to Las Vegas had stabilized so far in 2026. And ultimately, unless we see a drastic decline in traffic, VICI's going to continue to collect rent.

Now, the rise of online gaming, he stated, doesn't seem to be a threat as well.

But here's where my potential concern was. Their two top tenants are likely going to be taken private. Now, why is that so important to note for retail investors? Well, because previously when those were public companies, we could see their financials.

We had access to their public data, and we could know how easily they were able to make their rent payments. All of a sudden, retail investors aren't going to have access to that information.

So, remember, I've stated many times on the channel before, valuation multiples are primarily driven by two things: the rate at which companies are growing earnings, or in this case AFFO per share, and how predictable future cash flows are.

Ultimately, nothing has changed for VICI, fundamentally speaking. However, the predictability of future cash flows has been diminished greatly because their two largest tenants are likely going private, and as a result, we don't have as much predictability when it comes to future cash flows.

We don't know what their rent coverage ratios are going to look like. So, naturally, the market assigns it a lower valuation multiple.

But, the beauty of this is at these prices, you can now lock in a yield of around 6.7% from a REIT that appears to be growing AFFO per share, and is projected to continue to do so at a healthy rate, meaning you'll continue to see dividend growth.

So, again, if you want a much deeper dive into this REIT and this opportunity, be sure to check out the podcast, which I'll link down in the description. But, complete transparency, VICI is a stock a few months ago I added more shares of to my portfolio.