Looking At Casino And Gambling Related Dividend Stocks
Investing in sin stocks is nothing new and many have found great opportunities and profits pouring money into alcohol, tobacco and gambling stocks. In fact, casino and gambling related ventures are rapidly expanding beyond the Vegas strip and tribal lands into China’s growing gambling mecca, Macau. Several big players in this space now derive most of their revenue from Macau including Wynn Resorts and Las Vegas Sands. It’s no surprise then that a lot of attention is being placed on the Chinese gambling market as 2014 total revenue exceeded $44 billion compared to approximately $6.5 billion for the Vegas strip. Of course, being a dividend driven investor I am on the lookout for names that not only potentially provide capital appreciation but can also provide a solid, steady and growing passive income stream via dividend distributions. With that being said let’s examine some of the more popular casino and gaming dividend stocks.
First up is a very familiar name among casino stocks, Las Vegas Sands Corp. (LVS). Based in Las Vegas, NV, LVS owns and operates casinos and resorts under its namesake as well as The Venetian, Four Seasons, Sands and The Palazzo among others. Currently yielding a generous 4.70% dividend with a relatively high payout ratio of 78.5% on an EPS of 3.51, LVS has a short dividend history which may provide relatively small dividend increases going forward. However, this fact is tempered by the relatively high current yield received. On a valuation basis, LVS has a current PE of 15.8 with a similar forward PE making it cheaper than the market as a whole and much lower than its five year average PE of 125.9. Of course, having a Morningstar rating of four stars doesn’t hurt either.
Another very familiar name in the casino and resort space is Wynn Resorts Ltd. (WYNN). Also base in Las Vegas, NV, WYNN operates under its namesake as well as the Encore brand in both Macau and Las Vegas. Another generous dividend yielding stock, WYNN sports a current 4.10% yield with a very high payout ratio of 90.2% on an EPS of 8.20. Having a longer dividend history than LVS, WYNN offers a very respectable five year annualized dividend growth rate of 9.34%. While future raises might be less generous there seems to be a commitment to a current high yield. From a valuation perspective WYNN trades with a current PE of 17.8 which is well below its five year average PE of 70.7. As with LVS, WYNN also sports a four start rating from Morningstar.
