And the champion is…
…Churchill Downs.
Okay, all you income-oriented buy-and-holders. If you invested in dividend-paying U.S.-listed gaming stocks five years ago and held on, your best return wasn’t from one of the big Las Vegas glamor names that grab the headlines. It came out of Louisville, Kentucky, in the name of Churchill Downs, whose stock leaped 188 percent.
Here are the next four biggest stock gainers among a list of companies that pay a dividend, had paid a dividend during that period, or, we think, are candidates to pay one:
- Monarch Casino: +83 percent
- VICI Properties: +77
- Boyd Gaming: +73
- Gaming & Leisure Properties: +67
If you haven’t noticed, there isn’t a Las Vegas Strip name among the bunch. That might give you some idea where money is to be made—more likely Any Town, USA, though VICI is doing well buying Strip properties.
The biggest losers among stocks on this screen?
- Wynn Resorts: -39 percent
- Las Vegas Sands: -21
Both paid handsome dividends five years ago, but now pay nil. Their declines also come despite their recent run-ups in the excitement about China’s reopening benefitting Macau. That shows how far they had fallen. WYNN is 58 percent below its 2014 peak and LVS is down 57 percent since its pre-Great Recession top all the way back in 2007.
Now, what about the future? Here are the top five stock appreciation forecasts over the next year by sell-side analysts:
- Golden Entertainment: +37 percent
- MGM Resorts: +23
- IGT: +22
- Boyd: +12
- VICI: +11
Here’s the top total return forecasts incorporating current dividend:
- Golden: +37 percent
- IGT: +25
- MGM: +23
- VICI: +16
- Gaming & Leisure: +11
Here are the top current dividend yields among gamers:
- Gaming & Leisure: +5.4 percent
- VICI: +4.6
- IGT: +3.1
- Red Rock Resorts: +2.2
- Red Rock Resorts*: +4.5
- Boyd: +1.0
* Assumes RRR again pays a $1 special dividend
DIVIDEND WILD CARDS: Monarch And Golden
Neither company pays a dividend now, but that could change.
• Monarch is a money machine. Most estimates are that it will generate more than $180 million in EBITDA annually. That is a lot for a company with no debt, few maintenance capital expenditures and just 19 million shares outstanding.
What will Monarch do with all that money? An acquisition is often mentioned, but that is more of what analysts think than a plan by CEO John Farahi, who, along with his siblings, controls the company.
Farahi would like to find another acquisition like Monarch is capitalizing on in Black Hawk, Colorado, but such opportunities are rare and Farahi won’t chase a dream. Look up the word “prudent” in the dictionary. You’ll see his picture.
It is clear that Monarch could pay a hefty dividend—say $2 a share—and still pile up cash rapidly.
• Golden also has a strong balance sheet. Most projections are that debt-to-equity will be around 1.7 times this year as EBITDA runs $250 million or more.
This year, Golden will sell its Maryland casino for $260 million. That’s a big wad even after taxes.
With around 30 million shares, Golden could pay a very nice special dividend and still keep lots of cash for growth investment, or even to initiate a recurring dividend.
There is precedent—seven years ago, Golden got a windfall when the Jamul Indian tribe in California repaid a loan due to Lakes Entertainment, which Golden had acquired in a reverse merger. It gave the proceeds to shareholders in a one-time dividend.
LET’S NOT FORGET THE GUYS FROM DOWN UNDER
No discussion of dividend-paying gaming companies would be complete without mentioning Aristocrat Leisure, which is headquartered in Las Vegas despite being Australian listed.
Every generation, it seems, has a dominating games company —Universal, Bally, IGT. Today, it is Aristocrat.
Aristocrat stock has risen 44 percent in the past five years and its dividend currently yields 1.4 percent. Analysts expect 15 percent stock growth this year.
For truly long-term holders, Aristocrat has been a stock to grow rich on like an early Microsoft or Apple. Shares are up 5,200 percent since the late 1990s—or 68 percent just since the Covid-inspired stock market collapse of March 2020.
Perhaps as impressive, Aristocrat not only maintains its successful slot games culture, but has moved into both real money and casual online gaming in both casino and role-playing genres in ways that suggest its run is far from over.
