Image: Wynn Resorts.

Wynn Resorts (NASDAQ:WYNN) raised its dividend during the most recently reported quarter to $1.50 per share per quarter, a $0.25 increase. The company also gave investors an added special dividend of $1 per share. The new, regular $6 annual dividend puts Wynn at an industry-high 3.4% annual yield.

However, while Wynn's new, higher dividend yield is attractive, there are a few reasons that buying this stock on its dividend alone doesn't make sense. With competitors such as Las Vegas Sands (NYSE:LVS) and MGM Resorts International (NYSE:MGM) in each of Wynn's markets, the company is probably not a strong play on being the long-term winner in China or the United States. While dividend income from Wynn stock could be a nice bonus, it seems likely to be outweighed by a share price decrease, or, more importantly, a share price increase by a company like Las Vegas Sands that has much more chance of gaining in the next few years, while still offering a dividend nearly as attractive as Wynn's. Las Vegas Sands' yield is around 3.1%.

Wynn could be a great dividend investment, but is that enough?
Wynn Resorts has the highest dividend in the industry, even more so now with its raised dividend. It's been steadily raising its dividend since 2010, nearly every year. Additionally, Wynn has consistently paid special dividends over the past five years. That trend continues this quarter, with the $1 special dividend to be paid at the end of November.

Wynn's 3.4% yield -- compared with Las Vegas Sands, at 3.1%, and MGM, which doesn't pay a dividend -- is an attractive reason to consider Wynn Resorts as a buy-and-hold investment in this industry. However, the stock itself is probably not poised for much growth and could be in for further decline. Las Vegas Sands, which is a close second behind Wynn in terms of dividend yield, provides much more opportunity for price appreciation, making it the better pick for dividend investors and regular investors alike. 

Why Wynn stock itself might be in for further decline
During the most recent quarter reported, Wynn's revenue was down 1.5% year over year, because of a 5.6% revenue drop in its Macau revenue. While the company did make impressive gains in Las Vegas, with revenues there up 9% year over year, U.S. operations account for less than a third of the company's total revenue, as Macau has continued to be the company's biggest bet.

The main reason Wynn and other Macau gambling companies have struggled so much in Macau lately is the massive decline of the VIP gambling segment as the Chinese government cracks down on "junket operators," third-party groups that bring high-net-worth players to Macau and have been found to often provide shady loan schemes to those players. Unfortunately for Wynn, the VIP segment has traditionally made up a significant part of its Macau revenue base. This continued pressure has pushed Wynn's share price down in the past six months. As this segment continues to drop, Wynn's revenue in Macau could fall even further in Macau before it gets better.

While the long-term story for Macau still looks like a good bet, Wynn doesn't seem to be the best positioned to win on what will keep Macau growing in the years to come: the mass market. This steadily growing segment is posting year-over-year double-digit growth rates each quarter for all of Macau. Wynn is trying to gain on this trend by catering more to the mass market, especially with the company's newest Wynn Palace resort in Macau slated to open in early 2016. However, Wynn will have a hard time competing with Las Vegas Sands for the mass market in Macau.

The Parisian Macao, which will include an Eiffel Tower replica at 50% scale. Image: Las Vegas Sands.

Which is the better bet now?
Both Wynn and Las Vegas Sands will be opening a new resort on the Cotai strip in Macau. However, Las Vegas Sands, which already dominates the Cotai strip with multiple properties -- while Wynn currently has no operations there yet -- is slated to open its newest resort, The Parisian, a few months before Wynn Palace. Based on the number of hotel rooms in Macau, which is already in Las Vegas Sands' favor and will be even more so following these openings, Las Vegas Sands stands out as the clear winner on mass-market growth in Macau.

Looking at the dividend history of the two companies, Wynn definitely wins on a longer and more consistent history of dividend increases and paying out special dividends almost yearly. Therefore, for investors looking only at dividend yield, Wynn may be the better bet. And if the stock price does continue to drop, that would increase Wynn's dividend yield further.

However, investors should also consider that the current small difference in dividend yield for each stock could be outweighed by the missed opportunity of much more growth in share price that investors in Las Vegas Sands will be setting themselves up for. If LVS's share price does grow, and the dividend stays the same, that will lower the dividend yield. But a lowered dividend yield because the underlying shares you own have increased in value is not a bad problem to have. So while the companies have a nearly identical dividend yield now, that could change as the prices for the underlying shares change. For investors who want a relatively strong dividend, yet are also looking for the opportunity for underlying share price appreciation, Las Vegas Sands might be the better bet now.