The Motley Fool Previous Page

1 Great Dividend You Can Buy Right Now

Sean Williams
December 14, 2012

Dividend stocks are everywhere, but many just downright stink. In some cases, the business model is in serious jeopardy, or the dividend itself isn't sustainable. In others, the dividend is so low, it's not even worth the paper your dividend check is printed on. A solid dividend strikes the right balance of growth, value, and sustainability.

Today, and one day each week for the rest of the year, we're going to look at one dividend-paying company that you can put in your portfolio for the long term without too much concern. This isn't to say that these stocks don't share the same macro risks that other companies have, but they are a step above your common grade of dividend stock. Check out last week's selection.

This week, I'm going to roll the dice and point out why Wynn Resorts (NASDAQ: WYNN) has a business model and a dividend that just keeps paying out for shareholders.

Double zeroes
As you might imagine by now, the gaming industry has been anything but a resounding success since the housing bubble burst in 2007 and the credit crisis followed in 2008. Consumer discretionary spending is the heartbeat of the gaming industry, and it's been challenged from every imaginable angle over the past few years. Europe's ongoing credit crisis is constraining any hope of growth in that region, and China's GDP, while growing by just over 7%, is still well below its 30-year average of 10%.

This melting pot of bad news has ransacked the resort and casino sector, resulting in non-adjusted operating losses for MGM Resorts (NYSE: MGM) dating back four years, and coercing Caesars Entertainment (NASDAQ: CZR) to go public in order to raise cash to attempt to pay down a mountain's worth of debt. MGM, with its focus on the Las Vegas strip, and Caesars, with its domestic ties, have struggled to generate meaningful growth as U.S. growth has tapered off.

Wynn Resorts is setting the standard of how to operate and diversify an upscale casino company. With heavy exposure to Macau, a rapidly growing gaming region of China, and meanwhile catering to the luxury resort and casino frequenter in the United States, Wynn has been writing the book on how to operate in the casino business for years.

In Wynn's most recent quarterly report, it noted that Macau net revenue actually fell 4.3%, which doesn't come as much of a surprise given the GDP contraction we've witnessed in China. Ultimately, over the long run and based on what we've seen in the past couple of years from Wynn, it's standing on sacred ground, holding one of only six licenses to operate casinos in Macau. Catering to the most affluent in Macau, Wynn offers some mind-crushing return on equity, or ROE, figures relative to its peers. Even with Las Vegas Sands (NYSE: LVS) gaining market share in Macau, its trailing-12-month ROE of 18.2% is dwarfed by Wynn's trailing ROE of 45.9%.

Another area where Wynn sets itself apart from Las Vegas Sands relates to the push toward online gambling. Earlier this year, Intern