Las Vegas Sands Corp.: Is LVS Stock a Dividend Paying Gem?
December 17, 2016
LVS Stock Worth a Look From Income Investors
There are countless companies that pay dividends, which means finding a dividend-paying gem can be like finding a needle in a haystack.
I’ve found one stock that could prove to be a dividend-paying gem: Las Vegas Sands Corp. (NYSE:LVS). The reason is not that the company pays a dividend, but that management treats shareholders how they should be treated. Let me explain.
First off, LVS stock is currently yielding 5.03%, with a trading price of $57.25. The dividend, paid on a quarterly basis and reviewed every January, has nearly quadrupled over the past five years–part of why LVS stock is a dividend-paying gem.
In 2012, Las Vegas Sands paid a special dividend to shareholders. At the time, the regular dividend was $0.25 on a quarterly basis; a special dividend of $2.75 was paid to shareholders. This was an unexpected event that management took to reward their shareholders.
The dividend has not been the only way that the surplus cash was used to reward shareholders. Since 2013, over $2.4 billion was used to repurchase shares. When a company buys back shares, it implies that management believes that the market is undervaluing the stock price.(Source: “Stock Repurchase History,” Las Vegas Sands Corp., last accessed December 16, 2016.)
The shares were repurchased between prices as low as $44.55 and as high as $80.80; the current trading price is $57.25. This would signal to the market that the company still believes the shares are undervalued.
All this money being returned in various ways is what I mean by shareholders being treated the way they should be treated.
Future Growth
Las Vegas Sands started in the U.S. and still has a presence there. That said, going forward, the company’s primary growth will be coming from China, particularly Macao, which is emerging as the next Las Vegas.
The change in priorities is because growth in the U.S. has trended down into the single-digits. In contrast, the growth in Macao is in the double-digits, accounting for 55% of the company’s earnings. (Source: “3Q16 Earnings Call Presentation,” Las Vegas Sands Corp., November 3, 2016.)
Since the market in Macao is not mature like the U.S. market, management is spending more money to grow the company’s market share in Macao. This is one of the reasons why a special dividend has not been paid since 2012. The focus for management has been growing the bottom line. Even though the market is still growing in Macao and still in the early days; shareholders have noticed this key driver. LVS stock over the past year is up 32%.
Final Thoughts on LVS Stock
It is rare to find a management team that is proactive and changing how the company earns money. But with Las Vegas Sands, they knew that changes needed to be made, so they took action.
All the money returned to shareholders via a growing dividend, a special dividend, and share repurchases has made LVS stock a dividend-paying gem. Once the capital spending is completed in Macao, there is a possibility of more special dividends.
