Wynn: The Loosest Dividends in Town

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Dividends have been a staple of popular sin stocks ranging from Altria Group (NYSE: MO) to Diageo (NYSE: DEO), but investors in major gambling companies have never really reaped the benefit of that quarterly cash cushion.

Now, Wynn Resorts (Nasdaq: WYNN) is ready to make a change by offering investors extra change. On Monday, Wynn said its board had approved a quarterly payout tentatively scheduled at $0.20 a share for the first quarter of 2010, payable in the second quarter.

In addition, Wynn announced it would offer a special $4-a-share cash dividend to common shareholders, payable Dec. 3 to shareholders of record on Nov. 19. In the past, Wynn has occasionally offered special cash dividends.

Why the sudden largesse? Is Wynn transforming itself into a dividend play? Is it telling the world it believes its balance sheet is under control, even though the third-quarter total debt-to-equity ratio is 223%? All things considered, though, that's better than the end-of-2008 ratio of a whopping 351%.

The company isn't saying much at all beyond a terse press release that was issued with less fanfare and detail than was given a few days earlier to the chocolatier at Wynn Las Vegas placing second in the World Chocolate Masters competition.

Little dividend action at gambling companies
Wynn's big-market-cap peers, MGM Mirage (NYSE: MGM) and Las Vegas Sands (NYSE: LVS), don't offer quarterly dividends and neither do most publicly traded gambling companies. The largest casino operator with a quarterly payout is Ameristar Casinos (Nasdaq: ASCA). Gambling technology specialist International Game Technology (NYSE: IGT) also pays a small dividend.

Some conspiracy theorists might figure Wynn's announcement was timed to steal headlines from Las Vegas Sands. On Monday, Wynn's rival revealed the price range of an initial public offering on the Hong Kong Stock Exchange, hoping to raise as much as $3.35 billion for a portion of its Macau operations. Wynn launched its Macau-related IPO on the Hong Kong Stock Exchange last month.

Well, let's not push the rivalry too far. In November 2006 and November 2007, Wynn announced $6-a-share special cash dividends for common stock owners. Of course, Wynn could have unveiled its latest dividend news any day this month. But it chose Monday. Coincidence? I don't think so.