Wynn Resorts issues $5-a-share dividend

Shares of Wynn Resorts Ltd. rose Wednesday by as much as 5.7 percent after declaring a $5 a share special dividend.

The company, operator of the Wynn and Encore casinos in Las Vegas and Macau, China, said the dividend is payable on Dec. 21 to holders of record on Nov. 23.

Wynn Resorts has paid a special dividend in four of the past five years. The company led by CEO Steven Wynn issued an $8 special dividend last year, but it disappointed investors on Oct. 19 when it said issuing another special dividend was uncertain.

As of Sept. 30, the largest individual shareholder in Wynn was Ivy Asset Strategy C, an investment fund with more than 12.1 million shares. The fund's dividend payment was valued at $60.8 million.

Based in Shawnee Mission, Kan., Ivy Funds, which owns Ivy Asset Strategy C, also owns 1.2 million additional shares in the gaming company. The dividends generated by those two investments was valued at $2.1 million.

Wynn Resorts shares gained 5.78 percent in early morning trading, before closing Wednesday at $132.54, a gain of 3.06 percent, of $3.93 a share on moderate volume of 3.7 million shares traded on the Nasdaq Global Select Market.

Wynn Resorts shares have traded from a low of $99.21 to a high of $172.58 over the past 52 weeks.

"In our view, this meaningful dividend reflects Wynn's strong balance sheet/high cash balance, and its strong cash flow generating abilities. ... It should reverse soured investor sentiment from Wynn's not declaring a dividend when it reported third quarter results on Oct. 19," J.P. Morgan analyst Joe Greff said in a research note.

Greff reiterated his "overweight" rating on Wynn was based on the current strength and momentum in Macau, where the gaming company "enjoys a premium position in VIP and high-end premium mass and luxury segments."

He also expected Wynn to benefit from "what should be continued improving Las Vegas Strip operating results given a more rational and better high-end room pricing environment."

The Las Vegas-based gaming company last month reported third-quarter earnings of $127.1 million, or $1.01 a share, compared with a loss of $33.5 million, or 27 cents a share, a year earlier. Wynn credited the company's Macau properties for generating three-quarters of the company's revenues.

"The size of the dividend slightly exceeded our expectation of $4 per share," said Bill Lerner, an analyst with Union Gaming Research in Las Vegas. "Despite Wynn's ... capacity to issue a much larger special dividend, we understand the board's decision to presumably reserve capital for growth projects and general macro uncertainty."

Lerner estimated Wynn's liquidity at $3.16 billion as of Sept. 30. Analysts surveyed by Yahoo Finance estimate fourth-quarter earnings of $1.32 a share on revenue of $1.37 billion.

For 2011, estimates for earnings were $5.37 a share on $5.3 billion in revenue.

Contact reporter Chris Sieroty at
csieroty@reviewjournal.com or 702-477-3893.