Wynn Resorts, Limited (NASDAQ:WYNN) was one of the early dividend paying companies in gaming, but of late it's become a lot less attractive of a dividend play. Two years of declining revenue in Macau forced management to cut the dividend 75% to the current $2 per share annually. And with a $9.4 billion debt load and the $1.9 billion to $2.1 billion Wynn Boston Harbor under construction it's hard to see how the dividend will go up in the near future.
But there are some sin stocks that do have dividends that are more attractive than Wynn Resorts. Las Vegas Sands Corp. (NYSE:LVS), Altria Group Inc (NYSE:MO), and MGM Growth Properties LLC (NYSE:MGP) should be at the top of your list.
The big gaming company in town
Las Vegas Sands is one of Wynn Resorts' closest competitors. But it moved far more aggressively into Asia a decade ago and that investment resulted in a very profitable portfolio of properties today.
Not only are resorts spitting off billions in cash each year, but Las Vegas Sands has been able to maintain a very conservative balance sheet as well. You can see below that Las Vegas Sands and Wynn have very similar debt loads but Las Vegas Sands generates four times as much in EBITDA, a proxy for cash flow from casinos.
As dividends go, Las Vegas Sands has much more cash flow and less leverage on the balance sheet. And when you tack on the 5.2% dividend yield compared to 2.2% at Wynn, it's a much better dividend stock.
Also in the "sin stock" family is Altria Group, owner of Philip Morris and John Middleton tobacco brands. The company is in a market that some investors avoid altogether, but it has strong cash flow and a very good dividend. You can see below that the dividend has risen consistently over the last five years, along with the stock.
What makes Altria's dividend attractive is the addictive nature of the products it sells. Cash flows are very consistent from customers coming back time and again for cigarettes and that cash is paid out to shareholders in the form of a dividend.
This isn't a stock for everyone, but with a 3.7% dividend yield it's a strong dividend and higher yield than Wynn Resorts.
The real estate play
Also in the gaming space, MGM Growth Properties is a REIT that owns real estate assets that MGM Resorts then rents. The cash flow from that rental income is then paid as a dividend, currently yielding 6.3%.
This is a play on the gaming industry, but it's much lower risk because it's really a real estate play. If gaming declines or visitors change their spending habits it's no loss to MGM Growth Properties. The stock may not have the same upside as gaming stocks, but if it's dividends you're looking for then this is a tough gaming stock to beat.