As the gaming industry in Macau matures, Melco Resorts (NASDAQ:MLCO) finds itself watching its rivals expand their reach further into its key markets. MGM Resorts and Wynn Resorts have built new resorts in the Cotai region, and Las Vegas Sands continues to leverage its market-leading position. 

The dynamic leaves Melco Resorts riding the industry's waves in Macau, for better or worse. And that's a lot of what we saw in its first-quarter 2019 earnings report, which was released on May 7. 

Macau's skyline from the water.

Image source: Getty Images.

City of Dreams leads the way

Overall gaming revenue is the bar any individual casino's results should be compared against, and Macau's overall gaming revenue fell 0.5% year over year in the first quarter. At City of Dreams, revenue was up 11.4% to $713.3 million and adjusted EBITDA rose 9.9% to $228.6 million. 

A deeper dive into the numbers shows a $900 million drop in rolling chip (VIP) volume -- a metric investors should keep an eye on. The drop in VIP play was offset by an 11.5% increase in mass-market play in the quarter, but VIPs make up about two-thirds of the Macau market, so they're important for Melco. 

Studio City was the big shocker: Its revenue dropped 10.3% to $330.4 million and adjusted EBITDA slid 12.4% to $96.4 million. VIP play was the big culprit in the decline: Studio City generated just $2.7 billion in rolling chip volume compared to $6.6 billion a year ago. 

Overall, Melco Resorts did fine in Macau. But the fact that its results were flat even though most of its exposure is in the growing Cotai region should be seen as a warning sign that competitors are going to start taking market share with their newer resorts. 

Bets paying off in The Philippines

The one Melco resort that's performing extremely well is City of Dreams Manila, the company's joint venture with Belle Corporation in The Philippines. The property had flat revenue in the quarter of $142.4 million, but adjusted EBITDA was $60.5 million, up from $58.8 million a year ago. 

Manila wasn't originally seen as a big deal for Melco Resorts, and the company only invested $680 million in the property. In the last 12 months alone, though, Melco's share of the resort's profits has come to $168.3 million, a strong return on investment. 

A great gaming dividend

Melco Resorts isn't the best dividend stock in gaming from a yield standpoint, but it may be the most stable given the company's operations. Management adjusts its payout based on actual results, and for Q1, it will distribute $0.1551 per American depositary share (ADS). 

Companies that as a policy hold their dividends steady can get stuck taking on debt or compromising on investments just to cover their quarterly payouts. Melco Resorts instead pays a fairly steady dividend based on cash flow, which enables it keep some cash to de-lever its balance sheet as well. 

Steady as it goes

Melco Resorts certainly delivered a mixed first quarter, and I would recommend watching VIP volumes in Macau in the coming quarters. But overall, this company is steadily generating cash and paying a nice dividend to investors. That's all we should expect absent any new projects to drive growth.