Last update on 2024-06-27

Las Vegas Sands (LVS) - Dividend Analysis (Final Score: 3/8)

Analyze Las Vegas Sands (LVS) dividend performance with a final score of 3/8. Learn about their dividend yield, payout ratio, dividend stability, and more.

Short Analysis - Dividend Score: 3

We're running Las Vegas Sands (LVS) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

Las Vegas Sands (LVS) was evaluated based on 8 criteria to determine the performance and stability of its dividend policy. It received a low score of 3 out of 8. The analysis showed several concerns: 1. LVS's dividend yield of 0.8128% is below the industry average of 1.48%, with a declining trend in recent years. 2. The Dividend Growth Rate for LVS has been inconsistent and unstable, showing an average annual decline of -6.98%. 3. The average payout ratio for LVS is 38.57%, which is below the healthy mark of 65%, indicating a somewhat conservative dividend policy. 4. Dividends in some years were not well-covered by earnings, highlighting concerns over sustainability. 5. The stability of dividends is an issue, as there were significant drops and periods without dividends over the past two decades. 6. LVS has not paid dividends consistently for over 25 years. 7. Stable dividends show significant variability, with multiple years of no dividends. 8. The evaluation on reliable stock repurchases was incomplete but indicates inconsistent performance over the past 20 years. In summary, LVS exhibits numerous inconsistencies and concerns regarding its dividend stability, growth, and payout policies.

Insights for Value Investors Seeking Stable Income

Based on the findings, it is advised for potential investors to exercise caution. The inconsistent dividend yield, unstable growth rate, and periods without payouts make LVS less suitable for income-focused investors. If stable, growing dividends are a key criterion, it may be beneficial to consider other companies with a more reliable track record in dividend payment and growth.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

Dividend yield refers to the ratio of a company's annual dividend compared to its share price.

Las Vegas Sands (LVS) has a dividend yield of 0.8128%, notably lower than the industry average of 1.48%. Historically, LVS had a peak dividend yield of 8.1239% in 2012. However, recent years show a decline, with dividends completely halted between 2020 and 2022 due to the pandemic's impact. Despite recent reinstatement of dividends, the current yield is low. This declining trend and below-average yield may suggest concerns for income-focused investors, impacting LVS's attractiveness.

Average annual Growth Rate higher than 5% in the last 20 years?

The Dividend Growth Rate (DGR) measures the annualized percentage rate of growth of a company's dividend per share over a given period, typically expressed as a percentage. This is crucial for investors as it provides insight into the health of the company's earnings and potential for income growth.

Las Vegas Sands (LVS) shows a volatile and inconsistent Dividend Growth Rate over the last 20 years. While there were years with significant increases, such as 42.8571% in 2013, the overall average Dividend Ratio of -6.98% indicates a general trend of declining dividend payouts. This erratic performance, coupled with several years of no dividends or negative growth, suggests instability, making LVS less appealing for dividend-focused investors. This negative trend is concerning, as reliable dividend growth is typically a sign of a financially robust and prosperous company.

Average annual Payout Ratio lower than 65% in the last 20 years?

explain the importance of an average payout ratio lower than 65%

Analyzing the payout ratio history of Las Vegas Sands (LVS) from 2003 to 2023, the average payout ratio stands at approximately 38.57%. It's essential to determine whether this ratio is favorable. Here's the break down: The payout ratio measures the proportion of earnings paid out as dividends to shareholders. Ideally, for stable growth companies, a payout ratio lower than 65% is usually considered healthy. Lower ratios imply that the company retains a significant portion of its earnings for reinvestment, covering existing liabilities, or weathering economic downturns. The data reveals that LVS generally maintained a payout ratio close to or below the 65% mark throughout most of the period, with exceptions in 2012, 2015, 2016, 2017, and 2018, where the payout ratio spiked above 65%. Specific anomalies include 2020, where the payout ratio saw a significant negative value, indicating possible losses, and certain years with a ratio of 0%, suggesting no dividends were paid out. The average payout ratio being 38.57%—well below the 65% mark—suggests that LVS has historically maintained a conservative and sustainable dividend policy, despite the noted exceptions. This trend is favorable as it indicates financial prudence and flexibility, allowing the company to reinvest earnings to drive growth while ensuring shareholders are rewarded.

Dividends Well Covered by Earnings?

Dividends well covered by earnings implies that the company generates sufficient profit from its operations to pay out its dividends. This is crucial because it indicates financial stability and sustainability of the dividend policy.

Analyzing Las Vegas Sands' data, we observe that in 2010, 2011, and again in 2017 EPS significantly exceeds dividend payout with coverage ratios of well over 1. However, severe declines are notable in EPS for 2020 and 2021, and the corresponding absence of dividends indicates poor coverage. EPS rose again in 2022 and 2023 but still reflected a more cautious dividend payout. A troubling trend, thus, appears during years of negative earnings per share 2008, 2009, 2020, 2021, showing dividends not supported by earnings, signaling sustainability concerns. Overall, this mixed trend raises red flags about predictability and stability.

Dividends Well Covered by Cash Flow?

Why is it important for dividends to be well covered by cash flow?

For healthy financial practices, a company's dividends should be comfortably covered by its free cash flow. This ratio ensures that the company isn't overextending itself to reward shareholders. Provide an analysis on LVS's trend over the years regarding whether their dividends are sustainable given their cash flow.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividend payments, where the dividend per share did not drop by more than 20% over the past two decades, is of utmost importance for income-seeking investors.

Las Vegas Sands (LVS) shows significant variability in its dividend per share over the last 20 years. Starting in 2011, LVS initiated a dividend of $3.75 followed by an abrupt reduction to $1.40 in 2012, and has achieved some stability with incremental increases until 2018 when it paid $3.08 per share. However, the dividend dropped substantially again to $0.79 in 2020 and was at $0 the following two years, highlighting further instability in dividends during this period. This inconsistency indicates a lack of predictable returns for income-seeking investors, which can be unfavorable for those relying on dividend stability. The overall trend is bad as it shows multiple occasions where dividends fell significantly, exceeding the 20% threshold.

Dividends Paid for Over 25 Years?

Explain the importance of whether the company has paid dividends for over 25 years.

Based on the provided data from 2000 to 2023, Las Vegas Sands (LVS) has not paid consistent dividends over the past 25 years. Notably, dividends were only paid starting from 2012. Its discontinuous pattern in certain years such as 2020, 2021, and 2022 is a negative trend in this context as it shows inconsistency in shareholder returns.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the criterion for Las Vegas Sands (LVS) and why it is important to consider

A reliable stock repurchase program indicates a company's financial health, as it suggests the firm generates enough surplus cash to buy back its shares consistently. This can support stock prices by reducing the number of shares outstanding, thereby increasing earnings per share (EPS).