Wynn Resorts (NASDAQ:WYNN) is the nearly $16 billion enterprise that is most commonly associated with big bets and big glamor. Perhaps big dividends should be added to that list as well. The company currently boasts a dividend of $1.50 per share per quarter, having most recently raised the dividend in late October.
Large dividends in the space are neither particularly common nor exceedingly rare. Rival Las Vegas Sands (NYSE:LVS) also rewards investors with a sizable dividend, but other foes provide little or no reward for their long-time holders. This places Wynn Resorts at least on the more attractive side of the dividend spectrum.
Why A Large Dividend Makes Wynn Attractive
There are other factors that one might point to that make Wynn Resorts an attractive stock to purchase. For one, their well-recognized name and unique position in the gambling markets abroad draws some investors in. However, nothing quite matches that dividend.
Fool.com discusses how the dividend at Wynn Resorts has evolved over the years. They point out that special dividends used to be the way that Wynn provided value to shareholders. However, this policy has changed and a regular dividend has taken over. From Fool.com:
Until 2010, Wynn Resorts relied on special dividends as its only method of paying shareholders. But four years ago, the company started paying a modest $0.25 per share quarterly dividend, and although that amounted to barely a 1% yield, it nevertheless got the ball rolling on more consistent dividend growth for Wynn.
Since that time, Wynn Resorts has provided a consistent quarterly dividend that has grown over time. No longer is it just $0.25 per share, but an incredible $1.50 per share. Considering Wynn's hefty 14+% profit margin and over $3 billion in cash reserves, investors can expect to at least see that dividend remain consistent if not grow over the years.
Even with its arguably premium price of $157.59 a share, WYNN still gives investors a 3.7% yield annually just from the dividend (figures current as of this writing). That sizable of a return helps to cushion against the possibility of capital depreciation for holders of this stock. Frequent increases in the dividend also mean that Wynn Resorts applies even more value for long-term holders.
Constantly Exceeding Expectations
In the hyper-competitive gambling market, Wynn Resorts has stood out as a company on a mission. According to CNBC.com, the company has beaten earnings expectations for the last five quarters in a row. This comes against the tailwinds of a potentially unpredictable gambling market. Wynn Resorts has found a way to maintain consistent profitability regardless of conditions.
Going forward, more money may pour into this stock as it appears to be a safe haven for investors. The company is firing on all cylinders, and of course they offer that safe and juicy dividend. It may seem odd to call a company involved in the gambling industry "safe," but that is what Wynn appears to be.
Potential Pitfalls: The Online Gambling Attack
At least a few unknowns do provide for some potential risks for Wynn Resorts. The legal status of online poker is one such risk that is frequently discussed. At the moment online poker remains a legal grey area in most parts of the United States. However, the game has been made legal for players in both Nevada and New Jersey.
Partnerships have been formed between online poker websites and brick and mortar casinos within the two legal states. Reuters reports that Wynn does hope to position itself as a player in this market, but they must face very real challenges from opponents like MGM Entertainment (NYSE:MGM). If expectations are set too high for Wynn, or if the legal status of online poker is challenged in those two states, then a very real hit to earnings could manifest.
If the game of online poker is forced back underground, then expect Wynn Resorts to lose out on some revenue that it had been expecting.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.