Vector Group (VGR) is an anomaly. The company combined two of the strongest growing asset classes of all time to create an income producing machine: real estate & Tobacco. With a current cash dividend yield of 6.91%, an annual stock dividend yield of 5%, and an annualized return of 20.13% since 2005, Vector Group has been on a tear, but with an impending rising rate environment, is it time to sell this high yielder?

Vector Group is the fourth largest U.S. tobacco producer, and dominates in the discount cigarette category thanks to its annual cost advantage of approximately $160M because of favorable treatment under the Master Settlement Agreement. The company also owns 70.6% of Douglas Elliman, the largest NYC real estate broker, and the fourth largest real estate broker in the U.S.

At first glance, the stock looks overvalued, trading at a forward P/E ratio of 29.66. However, this figure is deceptive because P/E doesn't account for unconsolidated assets, and Vector Group owns a portfolio of unconsolidated assets; international and domestic real estate investments, and joint ventures.

Vector Group's Enterprise Value/EBITDA ratio helps illustrate the remaining upside in the stock on a fundamental basis and accounts for the unconsolidated assets that P/E neglects. Trading at FY EV/EBITDA of 12.89x, Vector Group is still lagging its peers, considering the tobacco sector trades at 15.22x EV/EBITDA. Given the same multiple, Vector Group would be trading at ~$28.

Short term technicals: VGR broke below its 3 month trend line but remains in a rising channel, with support near $22. Resistance levels include the broken three month trend line near $24, and rising channel resistance at $25. VGR is up 14% YTD.

Long term technicals: VGR remains in a broad rising channel dating back to its 2009 lows. The stock is currently trading near support levels. Rising channel resistance is ~$27-$28. If the VGR closes below $22, expect the stock to test support near its 2009 trend line at $19-$20.