These Gaming Stocks Pay -- Guaranteed

When Las Vegas Sands (NYSE: LVS  ) recently announced fourth-quarter results, the company stated it will begin paying annual dividends of $1.00 per share. The dividend is a result of strong cash flow, liquidity, and a solid financial position. How did the company improve these metrics?

For the fourth quarter, Las Vegas Sands reported record growth in Macao property EBITDA, which increased by 27.2%, as well as an adjusted property EBITDA increase of 39.6% at Marina Bay Sands. Year over year, the company also set new record highs for net revenue of $9.41 billion and adjusted property EBITDA of $3.53 billion.

Sands shareholders will receive $0.25 per share ever quarter, with the first payment on March 30, 2012 (for shareholders of record on March 20). Las Vegas Sands will now join Wynn Resorts (Nasdaq: WYNN  ) as the only two major casino operators that currently pay dividends. Both companies will have roughly the same yield -- around 1.8%.

In the past, other casino operators have paid shareholders, but no longer do. MGM Resorts (NYSE: MGM  ) has paid a dividend twice, once in February of 2000 for $0.025, and again the same time the following year for $0.05 per share. Boyd Gaming (NYSE: BYD  ) also paid a dividend on a quarterly basis from 2003 till mid-2008, when it canceled it. Similar to Boyd in size and domestic concentration, Penn National has never paid a dividend. Foreign heavyweight Melco Crown (Nasdaq: MPEL  ) has also never given back to shareholders, despite returning 62% over the last 12 months.

Wynn, Las Vegas Sands, and Melco Crown all boast debt-to cash-ratios of 3-to-1 or lower, which may spark Melco to follow Sands' lead in respects to paying a dividend. Looking at this metric for MGM, Boyd, and Penn national -- which have 6.8-1, 18-1, and 9.8-1 ratios, respectively -- it is easy to see they need to concentrate on lowering debt before giving back to shareholders.   

Foolish take
In my opinion Las Vegas Sands is now a grade-A stock: It has solid and very reliable growth, great management, and now a dividend. Although Sands didn't make the list of 11 rock-solid dividend-paying companies in the past, maybe now it will. Check out who did make the list by clicking here.

At the time this article was written, Fool contributor Matt Thalman owned shares of MGM resorts, but no other companies mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On February 06, 2012, at 12:25 PM, cbotrader wrote:

    Thank you for being the first one to see the true value of this company....

    I also see the growth continuing for a long time with Japan, India, Viet Nan and Korea looking into the tourist and convention revenue these integrated resorts provide.

    We have to think past these as being casinos. They are resorts and convention centers which have casinos in them.....like a cruise ship.

    Just because a casino is present does not mean that only gamblers will come there. How many people who cruise, play in the casino....a very small number.

    Yet we do not think of crusie ships as casinos just because they have a casino there if you choose to play.

  • Report this Comment On February 06, 2012, at 12:39 PM, cp757 wrote:

    Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.One of the biggest changes in the gambling market that we see is Cotai Central in Macau . At the present time Las Vegas Sands has 19% of the market share but has many more properties coming on line over the next year. Because of the increasing traffic to Macau we believe LVS will gain market share because they will have almost half of the room capacity of Macau. We believe that when Las Vegas Sands has finished this next part of the build out they could have more than 25% of the market share . With over half of the casinos in Macau losing market share to Las Vegas Sands we expect this trend to continue because the government is not expected to grant any expansion for the near future other than those properties already planed. We expect Las Vegas Sands to have diminished competition based on the absence of any new entry's to the market for the next four years.

    China is the main benefactor to the growth of Macau and is building a 31 mile sea land bridge from Hong Kong to Macau at a cost of 10.7 billion dollars. This will be one of the world's longest bridges between Hong Kong and Macau and will reduce travel time to approximately 40 minutes.No other nation has ever undertaken a project like this to support a gambling enclave. China clearly has an interest in building Macau to a staggering 100 billion a year destination and is a third of the way to that goal .China's casino tax is an indirect way for Beijing to capture some of the vast untaxed income in China, where only 3 percent of workers pay income tax and it is universally believed that many fortunes made in business escape the Chinese tax enforcement system.so this is a voluntary way to collect that tax.With the added rooms coming on line with LVS we believe the government will encourage more traffic to Macau .The United States does over 90 billion with a population of 312 million so with China at 4 times that at 1.3 billion the total potential would be 300 to 400 billion.

    The take away we feel is that Las Vegas Sand could be at 25% of a 40 billion dollar jackpot in 2012 and that would make them a cool 10 billion dollars and a smart place to start your next investment research.

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