William Hill Is About to Enter a New Golden Age

LONDON -- The last 12 months have been huge for bookmaker William Hill  (LSE: WMH  ) . The company has undergone one fundraising, made two large acquisitions, and seen its share price increase by more than 50%.

The biggest issue affecting bookmakers is not who wins the 2:30 at Haydock but how governments worldwide will regulate gambling. While operating in an unregulated market may be highly profitable, the market usually awards a very low value to such earnings.

The other story in the industry is the massive change away from traditional high-street betting to online, mobile, and in-play products.

Recent moves at William Hill mean that the company is now in a far stronger position.

The 460 million pound acquisition in March of Sportingbet's Spanish and Australian operations brought new, regulated operations into William Hill. This was followed by the 429 million pound acquisition of the minority stake in William Hill Online. The company now has full control of its online offering.

Income
Gambling is well known as a safe haven for investors. Even in tough economic times, customers continue to place bets. This enables a company like William Hill to pay a larger and growing dividend.

For 2009, the total dividend payout to shareholders was 7.5 pence per share. This was increased rapidly to reach 10.4 pence a share in 2012. The dividend is forecast to continue rising, hitting 11.4 pence for this year followed by 12.7 pence in 2014. This puts the shares on a prospective 2014 yield of 3%.

Valuation
William Hill's return to the FTSE 100 means that the company is back on the radar of the very largest investment funds. This will bring ongoing demand for the shares from index funds.

Today, William Hill trades at 16.1 times 2012 earnings. While that may sound expensive, do not forget that the company will in the future have a larger stake in fast-growing markets.

The shares are currently priced at 13.6 times consensus forecasts for 2014. That's slightly ahead of the average rating enjoyed by a FTSE 100 constituent.

While William Hill's prospects look exciting, our team of analysts here at The Motley Fool believe that they have identified an even more attractive growth prospect in the FTSE 350. Like William Hill, this company has tremendous history and is a leader in some key markets. For the lowdown on their top selection, get "The Motley Fool's Top Growth Share for 2013." This report is 100% free and will be delivered to your inbox immediately. Just click here to learn more today.

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