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Boyd Gaming Enhances Shareholder Returns, Hikes Dividend

In a shareholder-friendly measure, Boyd Gaming Corporation BYD announced a hike in its dividend payout. This is reflective of the company’s intention to utilize free cash for enhancing shareholders’ returns.

Notably, the company declared a 16.7% hike in its quarterly dividend to 7 cents a share (or 28 cents annually) from the prior payout of 6 cents (or 24 cents annually). The raised dividend will be paid on Jul 15 to its stockholders on record as of Jun 17. The dividend yield, based on the new payout and the last closing market price, is approximately 1.1%.

Dividend hikes not only enhance shareholder returns but also raise the market value of the stock. Therefore, companies often tend to attract new investors and retain the old ones through this strategy.

This apart, Boyd Gaming consistently increases its share repurchase authorization and provides dividends. In 2018, the company has returned nearly $58 million to its shareholder through share repurchases. At the end of 2018, it has 111.8 million remaining under the current authorization. In 2017, the company had repurchased 1.2 million of shares.

Price Performance

Shares of the company have gained 20.6% year to date compared with the industry’s 10.9% rally. We are further encouraged by the company’s robust top- and bottom-line growth in the first quarter of 2019. Boyd Gaming is gaining from operations at the Downtown Las Vegas, and the Midwest and South segments.

Also, it continues to expand the portfolio by strengthening current operations and growing through capital investment as well as other measures. Its recent acquisition of Valley Forge Casino Resort and the Pinnacle Assets will drive growth in the coming quarters.

Moreover, the Zacks Rank #3 (Hold) company, which shares space with Penn National Gaming, Inc. PENN, has been generating EBITDAR growth for quite some time. In first-quarter 2019, the company reported EBITDAR growth for the 16th quarter out of the last 17 quarters. Adjusted EBITDAR was $223 million in the first quarter, up 39% year over year. Its Las Vegas business achieved 16th successive quarter of EBITDAR growth as well. For 2019, Boyd Gaming expects EBITDAR of $885-$910 million.

Boyd Gaming has also been reporting robust operating margin expansion for the past several quarters.

Key Picks

Better-ranked stocks worth considering in the same space include Century Casinos, Inc. CNTY and Las Vegas Sands Corp. LVS. Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Century Casinos has an impressive long-term earnings growth rate of 25%.

Las Vegas Sands’ current-year earnings are likely to witness 9% growth.

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