Vail Resorts (MTN -2.58%) runs a global network of destination and local ski areas, anchored by the Epic Pass. Its assets are iconic and irreplaceable, making it a stock worth keeping on any investor’s watchlist. After all, its competitive advantage is arguably insurmountable, as it’s incredibly difficult to get regulatory approval for new ski resorts. Despite these reasons to love the company, the stock is struggling.

After a tough stretch for the shares, the company’s dividend yield now sits at around 6%, likely drawing fresh interest from many income-focused investors. The yield alone, however, does not answer whether the stock is a buy. The better lens is business momentum, cash generation, and today’s valuation.

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Recent performance and cash generation

In Vail’s third quarter of fiscal 2025, Vail reported resort net revenue roughly flat year over year and earnings before interest, taxes, depreciation, and amortization (EBITDA) at just 1% lower, reflecting the ballast of pre-sold pass revenue despite a decline in skier visits. Management noted that destination passholder visitation improved late in the season, while uncommitted lift-ticket demand trailed expectations.

The company also updated fiscal-year resort reported EBITDA guidance to a range of $831 million to $851 million (quite substantial in the context of the company’s market capitalization of $5.3 billion), pointing to continued cost discipline and the benefit of its two-year resource efficiency plan.

Early pass trends heading into the 2025/2026 season were mixed but stable through late May: units down about 1% and sales dollars up roughly 2%, aided by pricing. Importantly for dividend investors, Vail’s trailing-nine-month cash from operations was about $726 million, providing ample flexibility to fund capex, repurchases, and dividends even in a year with choppy in-season visitation. Net debt stood near $2.23 billion at quarter-end, consistent with the balance-sheet posture Vail has maintained through cycles.

The investment case at a 6% yield

Vail’s quarterly dividend payments pencil out to roughly $8.88 per share annually, or something on the order of $330 million a year at the current share count. Management has been explicit: Today’s dividend level is underpinned by strong cash generation, but any future increases will depend on “a material increase in future cash flows,” the company said in its most recent earnings release. In other words, investors should not expect automatic hikes until the business has clearly stepped up its earnings and cash flow run rate.

Fortunately, the stock’s valuation is reasonable. In other words, Wall Street clearly isn’t expecting much. The stock trades at just 6.3 times the midpoint of management’s forecast for full-year resort reported EBITDA, a fair price for a capital-intensive, seasonal operator with substantial net debt.

Importantly, the company also returns cash to shareholders indirectly through stock buybacks. The board also expanded the buyback authorization in June, giving Vail the option to retire shares when it sees value. These dynamics — healthy cash generation and a disciplined capital return framework — support the case that investors are being paid to wait for steadier demand. In addition, if execution goes as well as management hopes, there are levers to improve margins through a companywide efficiency plan.

The risks, however, are significant. Weather is the obvious variable, but the latest quarter also underscored sensitivity to lower lift-ticket visitation from non-pass guests, even as passholders remained resilient. Additionally, macro volatility can defer pass purchase decisions, a labor-intensive operating model adds cost pressure, and Vail is executing leadership changes with Founder-Chair Rob Katz back as CEO. None of these is new to the story, yet they argue for patience and a meaningful margin of safety when estimating the stock’s intrinsic value before buying shares.

Put together, a near-6% dividend backed by robust operating cash flow and a pragmatic capital allocation stance makes the shares a solid option for income-oriented investors who can tolerate seasonal swings. But the dividend is not a growth engine on autopilot. For investors comfortable with weather and demand variability — and who value a large, pass-anchored ski network — today’s price looks reasonable. But those seeking faster dividend growth may want to watch pass sales and early season trends, waiting for signs of an inflection, before buying the stock.