A Once-in-a-Decade Opportunity: 1 Magnificent Dividend Stock Down 50% to Buy Now and Hold Forever

Core Viewpoint - Vail Resorts is currently facing cyclical challenges, resulting in a 50% decline in stock price since 2021, but its strong market position and attractive dividend yield of 4.7% may present a compelling investment opportunity [1][12]. Group 1: Company Overview - Vail Resorts is the largest global ski resort operator with 42 locations across North America, Australia, and Europe, and it holds a dominant position in the ski resort industry [2][3]. - The company has not seen the development of new large-scale resorts in the last 40 years, solidifying its claim on the most popular skiing destinations [4]. - Vail's wide moat, characterized by its irreplaceable mountain resorts and significant market presence, has allowed it to deliver total returns nearly double that of the S&P 500 over the past two decades [5]. Group 2: Financial Performance - Despite facing challenges such as reduced snowfall and lower skier visits, Vail Resorts reported growth in EBITDA, earnings per share, and free cash flow by 11%, 17%, and 28% respectively in its third quarter [7]. - The company generates nearly 75% of its visits from a growing subscription model, which has proven resilient during tough operating conditions [8]. - Vail's pass holders ski three times as many days as non-subscribers, providing additional revenue opportunities through ancillary offerings [9]. Group 3: Strategic Initiatives - Vail is expanding its footprint in Europe by acquiring its second European resort, Crans-Montana, for $107 million, indicating a strategic growth initiative in a market with significantly higher ski visits compared to North America [6]. - The company is launching a ski equipment subscription service, My Epic Gear, aimed at reducing costs for skiers while leveraging its extensive supply chain [10]. Group 4: Investment Considerations - Vail's current price-to-sales (P/S) ratio is at its lowest in a decade, and its dividend yield of 4.7% is the highest outside of a brief period in March 2020, suggesting a potential investment opportunity [11][12]. - The company utilizes only 83% of its free cash flow for dividend payments, indicating that the dividend is not at immediate risk of being cut [13]. - Vail's leadership position and wide moat are expected to help it navigate the current down cycle, making it an attractive dividend stock at its current valuation [14].