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Vector Group Ltd. (VGR)

Company Dividend Discount ModelIndustry: TobaccoSector: Consumer Defensive

Valuation Snapshot

Stable Growth$8.05 - $11.32$9.67
Multi-Stage$14.62 - $16.03$15.32
Blended Fair Value$12.49
Current Price$10.94
Upside14.21%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2023202220212020201920182017201620152014
DPS-10.95%-1.36%0.820.830.860.831.551.461.371.291.221.09
YoY Growth---1.58%-2.68%2.78%-46.18%5.72%6.56%6.30%5.74%12.44%15.63%
Dividend Yield--7.66%6.94%7.11%5.97%16.43%14.14%7.43%7.19%6.50%6.31%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)199.67
(-) Cash Dividends Paid (M)126.49
(=) Cash Retained (M)73.19
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)39.9324.9614.98
Cash Retained (M)73.1973.1973.19
(-) Cash Required (M)-39.93-24.96-14.98
(=) Excess Retained (M)33.2548.2358.21
(/) Shares Outstanding (M)153.96153.96153.96
(=) Excess Retained per Share0.220.310.38
LTM Dividend per Share0.820.820.82
(+) Excess Retained per Share0.220.310.38
(=) Adjusted Dividend1.041.131.20
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate-3.36%-2.36%-1.36%
Fair Value$8.05$9.67$11.32
Upside / Downside-26.41%-11.58%3.46%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)199.67194.97190.37185.89181.50177.23182.54
Payout Ratio63.35%68.68%74.01%79.34%84.67%90.00%92.50%
Projected Dividends (M)126.49133.90140.89147.48153.68159.50168.85

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate-3.36%-2.36%-1.36%
Year 1 PV (M)121.48122.73123.99
Year 2 PV (M)115.96118.37120.81
Year 3 PV (M)110.12113.58117.10
Year 4 PV (M)104.10108.48112.99
Year 5 PV (M)98.02103.20108.60
PV of Terminal Value (M)1,701.701,791.581,885.22
Equity Value (M)2,251.392,357.952,468.71
Shares Outstanding (M)153.96153.96153.96
Fair Value$14.62$15.32$16.03
Upside / Downside33.67%39.99%46.57%

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