VICI's recent decline is exaggerated; the stock offers value and yield potential given projected dividend growth.

And finally, we come to Vichy stock down 24% in the last year and in the last 5 years down 16.3%. Now, this is a stock I've covered very frequently over the last few weeks, but I actually do think the sell-off has been overstated, so a little bit of a spoiler alert, but at current prices, the yield is now pushing over 7.4%.

So, basically the highest yield that we've looked at today, trading at a 52-week low.

Now, what's interesting is with that 7.4% 4% yield, the dividend is very well covered. Now, again, for REITs, remember, we look at adjusted funds from operation relative to how much they're paying out in dividends.

And again, the dividend is very well covered. Their target payout ratio is roughly 70 to 75%. So, they do have some capital left over to fund internal growth, which we'll get back to that in a moment.

But on top of this, the recent sell-off is interesting because yes, the stock is selling off, but adjusted funds from operations have continued to grow every single year, and it's projected to remain that way.

So naturally, if the stock's earnings are growing, but the price is declining, the valuation multiple becomes much more attractive, and they're now trading at their lowest price to AFO multiple in the last 5 years at just 9.98x.

So why is this the case? Well, there's a couple of different things that we can point to. To start, we know the top two tenants for Vichi make up about 70% of the entire rent roll, and both of them are projected to go private over the next couple of years.

Now, why is that important? Well, it doesn't necessarily change the lease terms for Vichy Properties, but it does mean investors are going to lose insight into what the rent coverage for those two tenants actually looks like.

And so, why is that important? Well, it means there's less predictability in future cash flows. And anytime we have less predictability with future cash flows, investors are willing to pay a lower valuation multiple.

So, to some degree, a lower valuation multiple is justified. Is this much of a decline justified? That's the question.

Now, the other thing we do have to point out is their recent dividend increase was only about 2.2%. Which is lower than what we've historically seen. And I've talked on X and in YouTube videos as to why this might be.

And really, it boils down to two different things. They're lowering their target AFO payout ratio, which is not necessarily a bad thing because they need more capital to fund internal growth.

Right now, with interest rates very high, taking on debt is not nearly as attractive as it's historically been. But at the exact same time, issuing stock isn't as attractive. When the stock has declined considerably over the last 5 years and over the last year.

So, when issuing stock isn't attractive, taking on debt isn't attractive, what is the rate going to do? Well, it's going to retain more cash flow to fund future growth, which means you have to lower the dividend by a lower amount. I think this is a very likely case.

Now, the other thing we do have to point out is interest expense will likely grow for this stock as well as they have to refinance debt at higher rates. For example, over the next year, roughly 10 to 15% of their debt will need to be refinanced at a higher interest rate, meaning higher interest expense, which ultimately will lower AFO per share.

So if we continue to see a trend of higher interest expense over the next few years, that could slow AFO per share growth. That's the other thing we have to take into consideration.

But with all this being said, here's why I think Vichi is still attractive at current prices. Go ahead and zoom out again. Look at our valuation multiple model and look at the dividend discount model.

Let's take a close look at Vichy here. What we can see is if Vichy just grows dividends at 2%, there's still 10% upside at current prices. And if they grow it at 3%, we're not talking about 32% upside.

And I do think there's a realistic scenario where they can pull this off. For example, they're projected to grow AFO per share at roughly 3.3% over the next year. And if we look at analyst projections, it stays somewhere roughly in that range.

So those definitely aren't guaranteed returns, but you can see there's a lot of upside. I do think the sell-off has been overstated. So this is one of the more interesting high yield opportunities.