Las Vegas may not be the first place you think of finding great dividend stocks, but it should be on your short list. Casino giants like MGM Resorts (NYSE:MGM), Las Vegas Sands (NYSE:LVS), and Wynn Resorts (NASDAQ:WYNN) are no longer spending billions of dollars each year on new resorts and existing properties; they've become cash-flow machines

That's left the companies with more cash than they can reinvest into the business, and some of what they're making is going into a dividend. Suddenly, dividends are a great reason to own casino stocks. 

Las Vegas sign as the sun sets.

Image source: Getty Images.

The biggest dividend in Las Vegas

From a sheer scale standpoint, Las Vegas Sands pays the biggest dividend in Las Vegas. Nearly $3 billion was returned to shareholders through a dividend in the past year, and the payout is expected to grow to $3.16 per share in 2020

LVS Dividends Paid (TTM) Chart

LVS Dividends Paid (TTM) data by YCharts. TTM = trailing 12 months.

What makes Las Vegas Sands unique is its size and exposure to Asia's biggest gambling markets. Las Vegas is in the name, and that's where the company's home is, but the money is really flowing from Asia: 59% of the company's EBITDA, a proxy for cash flow from resorts, in the last 12 months has come from Macao, and 34% has come from Singapore. 

You can see above that Las Vegas Sands has a solid margin between the $5.4 billion of EBITDA generated in the past 12 months and what's being paid as a dividend. Even if the casino business goes through a downturn, this is a company and dividend built to last, and investors should love the payout. 

Two dividends in one

MGM Resorts pays a reasonable 1.7% dividend yield itself, but its real estate investment trust (REIT), MGM Growth Properties, also pays a hefty 5.8% yield. While the two are related, they're different ways to play the casino business and Las Vegas itself. 

MGM Resorts is the operating company, running casinos in Las Vegas, regional U.S. markets, and Macao. But unlike Las Vegas Sands, this is a Vegas-centric company: 59% of the company's EBITDA comes from the Las Vegas Strip, and that focus isn't going to change anytime soon. Without much real estate on the balance sheet and rent payments to make each quarter, MGM is a much more leveraged company than Las Vegas Sands or Wynn Resorts. That'll be great if revenue is growing, but will also hurt the dividend if revenue drops. 

MGM Growth Properties is the other side of MGM as a REIT with stable rent funding its operations -- and ultimately the dividend. It has some exposure to the rise and fall of resort revenue, but there's far more stability than with a traditional casino company. If you're looking for a stable dividend in the casino industry, this is the place to get it. 

The luxury dividend

Wynn Resorts serves the high end of the casino market, charging a premium for hotel rooms and having higher-limit gambling tables than competitors. That's been an advantage in Las Vegas and Macao, where the company generates more revenue and EBITDA per gambling table than its competitors. 

You can see below that the company's EBITDA generation is well over double what it pays in a dividend, which currently yields 3.4%, and that's even before accounting for any impact of the recently opened Encore Boston Harbor. When that property ramps up, it could generate $250 million in EBITDA in addition to the current properties. 

WYNN Revenue (TTM) Chart

WYNN Revenue (TTM) data by YCharts.

Wynn Resorts has the opportunity to grow incrementally in Macao and will add to U.S. operations with Encore Boston Harbor and a new addition to Wynn Las Vegas that will open in 2020. There's an opportunity to grow cash generation over the long term, and plenty of room for the dividend to grow as well. 

Las Vegas is great for dividends

Casino giants are cash-generating machines now that their multibillion-dollar resorts are built, and that allows for impressive dividends that are built to last. Any dividend investor should love that combination -- and, while surprising, Las Vegas is now a great place to find dividend stocks. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.