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Las Vegas Sands’ Dividends: Time to Place Your Bets?

Last September, I took a brief look at Las Vegas Sands (NYSE: LVS)…

At the time, what the company lacked in dividend history, it made up for with enthusiasm voiced by CEO, Sheldon Gary Adelson. He told investors (colorfully) that “everybody – whether it’s me, my wife, my kids, my pets, my doggies, or kitties – every other shareholder in the company wants dividends. So we’ll probably focus more on dividends.”

Turns out, Adelson wasn’t kidding around. He really was serious about forking over dividends to his “doggies” and “kitties,” because today Las Vegas Sands voted through a special dividend to the sum of $2.26 billion for shareholders.

That works out to $2.75 per share and is set for disbursement on December 18 to shareholders of record on December 10.

Granted, the special payout is almost certainly a way to reward shareholders without suffering the consequences of the Fiscal Cliff’s dividend tax hike. But don’t think it means the end of the road for Las Vegas Sands’ dividend program.

To the contrary, Adelson is as bullish on dividends as ever, according to the most recent November 1 conference call:

“We have every intention of increasing the dividend in the years ahead as our business and cash flows continue to grow… I can only say one thing about that: ‘Go dividend.’”

Go dividend? This guy sounds like a dividend cheerleader. And no wonder. He has a huge stake in the company and will be personally raking in a disbursement to the tune of $1.2 billion.

Of course, there’s no reason to hate on Adelson for following his own self-interest. Especially when what’s good for him turns out to be equally good for us.

To boot, not only is Las Vegas Sands unleashing a special dividend, it’s raising its quarterly payments by 40% to $0.35 per quarter, or $1.40 annualized. That gives it a yield of 3.02%, which is well above the S&P 500 average.

Having said that, the stock remains speculative at best. Like I pointed out in September, Las Vegas Sands is now entering only its second year as a dividend payer. Adelson can wax on all he wants about his love for dividends, but that doesn’t make it a solid program.

But for income investors willing to take a gamble, given the stock’s current P/E of 25.6 – which is vastly lower than the industry’s average P/E of 77.5 and LVS’s five-year average P/E of 79.9 – now might be the time to bite. Just be aware of your odds.

Safe investing,

Ryan Anders