We recently compiled a list of the 10 Best Casino Stocks that Pay Dividends. In this article, we will have a look at where Las Vegas Sands Corp. (NYSE:LVS) ranks among other casino stocks that pay dividends.
The casino industry is making a comeback after the setbacks caused by the pandemic in 2020. It took a while for the sector to recover, with several factors at play, but the rebound is now clear with the easing of social distancing measures. Data from the Gaming Inspection and Coordination Bureau showed that Macau’s gaming revenue surged by 14.8% in August this year, surpassing expectations. The increase in demand for entertainment during China’s summer vacation has driven growth in the world’s largest casino hub. Casino stocks fall under the larger leisure and hospitality sector and are affected by a range of influences, such as the state of the economy, consumer spending habits, and changes in gambling regulations.
Also read: 10 Best Casino Stocks To Buy According to Analysts
Investor confidence in the casino industry has also skyrocketed, thanks to their ability to consistently hit it out of the park over the years. Casino revenues experienced a notable increase in 2023. Additionally, online casinos, which mainly gained importance during the pandemic, also posted record earnings last year. A report by the American Gaming Association (AGA) revealed that brick-and-mortar casino slots and table games generated a record $49.4 billion in 2023, marking a 3.3% increase over 2022. On the state level, 19 out of 27 traditional gaming markets achieved record annual revenues. Online casino revenue also surged in 2023, growing 22.9% year-over-year to $6.2 billion across the six states with fully legalized iGaming. The report further highlighted that 12 of the top 20 commercial casino gaming markets saw revenue growth, with the Las Vegas Strip leading the way with the most significant year-over-year gains.
The casino industry, like many others, is evolving quickly to keep up with current trends. In a recent move, Singapore has made changes to the Casino Control Act, allowing its two casinos to offer cashless gaming options, though cryptocurrencies will not be permitted, as reported by CNA. Cashless bets can be placed at gaming tables or machines by using virtual credits from cashless gaming accounts or e-wallets. This adjustment is the most recent update to casino regulations in Singapore, which had previously tightened rules by lowering the threshold for monitoring cash deposits at casinos to prevent misuse by terrorist and criminal groups.
The shift to cashless betting has highlighted people’s growing preference for digital platforms. The pandemic underscored the need for contactless options while still allowing people to enjoy these activities. Sports betting is also becoming more prominent since it operates through digital channels, providing a similar thrill to that of casinos. According to the AGA, while commercial gambling revenue is on the rise in most states where it’s legal, the growth in sports betting and online gambling is outstripping that of traditional casinos. So much so that it seems that Americans are withdrawing funds from their stock brokerage accounts to support their online betting habits. This is the main conclusion from a recent working paper titled Gambling Away Stability: Sports Betting’s Impact on Vulnerable Households. The paper suggests that for every dollar spent on sports betting, net investments in stocks and other financial assets decreased by just over $2. With that, we will now take a look at some of the best casino stocks that pay dividends.
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Our Methodology:
For this list, we scanned Insider Monkey’s database of Q2 2024 and selected companies that are involved in the casino and gambling industry. These companies own and operate casinos, resorts, and other gaming and entertainment facilities. From the resultant list, we picked the 10 best casino stocks that pay dividends to shareholders and ranked them in ascending order of the number of hedge funds having stakes in them as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
2. Las Vegas Sands Corp. (NYSE:LVS)
Number of Hedge Fund Holders: 40
Las Vegas Sands Corp. (NYSE:LVS) is an American casino and resort company, headquartered in Nevada. The company’s recent performance has demonstrated operational growth compared to the previous year. Leadership remains optimistic about their ability to achieve industry-leading growth in both markets in the coming years, as they continue to execute significant capital investment programs in Macau and Singapore. That said, the stock has been underperforming for some time due to fluctuating consumer spending and other macroeconomic factors. Additionally, the company’s Macau operations, which made up over 60% of its revenue before the pandemic, are also contributing to the decline due to uncertainty surrounding the Chinese economy. Since the start of 2024, LVS is down by over 23%.
In its Q2 2024 earnings report, Las Vegas Sands Corp. (NYSE:LVS) mentioned the recovery in Macau during this period, though visitor numbers remain significantly lower than pre-pandemic levels. The company’s long-standing commitment to investing in initiatives that boost Macau’s business and leisure tourism, and its development as a global center for both, positions it favorably as travel and tourism spending gradually recovers. It reported revenue of $2.76 billion in the second quarter of 2024, up 8.62% from the same period last year.
Las Vegas Sands Corp. (NYSE:LVS) is optimistic about its operations in Macau and Singapore primarily due to its industry-leading cash flow. This would help the company to fund its ongoing investment and capital expenditure programs in both these locations, drive the pursuit of growth opportunities in new markets, and support its initiative to return excess capital to shareholders. At the end of June 2024, the company had unrestricted cash balances of $4.71 billion. It currently offers a quarterly dividend of $0.20 per share and has a dividend yield of 2.03%, as of September 12.
At the end of June 2024, 40 hedge funds remained bullish on Las Vegas Sands Corp. (NYSE:LVS), compared with 52 funds in the previous quarter, as per Insider Monkey’s database. The stakes held by these hedge funds are worth $2.3 billion in total.
Overall, LVS ranks 2nd on our list. While we acknowledge the potential for LVS to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LVS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.