Last update on 2024-06-27

Wynn Resorts (WYNN) - Dividend Analysis (Final Score: 2/8)

Analyze Wynn Resorts (WYNN) dividends performance with an 8-criteria scoring system. Final score: 2/8. Highlights on yield, growth rate, payout ratio, and stability.

Short Analysis - Dividend Score: 2

We're running Wynn Resorts (WYNN) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

The dividend analysis for Wynn Resorts (WYNN) shows that its dividend policy is largely inconsistent and below industry standards. In 2023, WYNN had a dividend yield of 0.8232%, which is significantly lower than the industry average of 1.48%. The company has had periods with high dividend growth, but many years with significant cuts or no dividends at all. WYNN's high payout ratio, averaging 215.22%, is very unstable and suggests financial struggles. Additionally, its dividends are not always covered by earnings or cash flow, hinting at sustainability issues. Lastly, WYNN lacks a stable dividend history, having paid dividends irregularly and missing payments in several years.

Insights for Value Investors Seeking Stable Income

Based on this analysis, Wynn Resorts (WYNN) does not seem to be a reliable option for investors seeking stable and consistent dividend income. The high volatility in its dividend payouts and financial instability make it a risky choice. It might be worth considering other stocks with more consistent and stable dividend policies.

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 is a financial ratio that shows how much a company pays out in dividends relative to its stock price, indicating investor's return on investment from dividends alone.

For 2023, Wynn Resorts (WYNN) has a dividend yield of 0.8232%, which is significantly lower than the industry average of 1.48%. Historically, WYNN’s dividend yield has seen considerable fluctuations, including peaks in 2006 (6.3932%), 2009 (6.8693%), and 2012 (8.4452%). However, there were years with no dividends such as 2008, 2016, 2020, and 2021. These fluctuations and 2023's below-average yield point to an inconsistent dividend payout strategy. Coupled with the fact that dividend yields often reflect a company’s financial health and profitability, this trend may be concerning for investors seeking stable, above-average dividend income. Notably, the industry average has also experienced volatility but has generally remained more stable and higher over the examined period.

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

The Dividend Growth Rate criterion analyses the annual rate at which dividend payments have increased over a specified period, generally to witness the company's commitment to rewarding its shareholders. This is particularly essential in understanding the consistency and health of the company’s long-term dividend policy.

The trend of Wynn Resorts' (WYNN) dividend per share ratio reveals an inconsistent and generally downward trajectory in its dividend growth rate over the last 20 years, with an average dividend ratio of -8.89%. Several years have shown dividends declining, including significant drops of -100% in some years, which is usually associated with difficult financial periods or strategic reinvestment of earnings. Although there are years with high positive growth rates (for example, 112.5% in 2010 and 46.15% in 2012), these are overshadowed by notable cuts and pauses. Given this inconsistency and the lower average, we cannot conclude that WYNN has maintained a dividend growth rate of higher than 5% over the past two decades. This inconsistency represents a bad trend for dividend reliability.

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

Define and explain the importance of the Average Payout Ratio being lower than 65% for Wynn Resorts (WYNN) over the last 20 years.

Analyzing the average payout ratio for Wynn Resorts (WYNN) over the past 20 years, we observe the following values: 0, 0, 0, 106.5265, 261.9058, 0, 2326.9343, 657.8947, 133.1722, 197.2714, 97.644, 87.0837, 156.1849, 84.1857, 27.4627, 51.4192, 325.4926, -5.1636, 0, 0, 11.5607. Averaging these values results in approximately 215.22%. This significantly exceeds the benchmark of 65%. Such high payout ratios can indicate financial instability, reflecting challenges in consistently generating sufficient earnings to support dividend payouts. This performance is concerning, suggesting WYNN may struggle with sustainable dividend payments.

Dividends Well Covered by Earnings?

Dividends being well covered by earnings implies that a company generates sufficient profit to pay dividends. This reflects the sustainability of dividend payments and financial health.

For Wynn Resorts (WYNN), the trend in Earnings per Share (EPS) versus Dividend per Share (DPS) from 2003 to 2023 reveals some inconsistencies. For instance, EPS was negative from 2003 to 2005, 2020 to 2022, suggesting the company was not profitable during these years, yet, dividends were paid in 2006, 2017, 2018, 2019, 2020, and 2023. Dividend coverage ratios in these years were significantly low or even negative, indicating reliance on other sources such as retained earnings or debt to maintain dividends. Ideally, dividend coverage ratios should be above 1, which occurred sporadically in certain years, such as 2007 (2.61) and 2009 (23.27). This irregular pattern may flag concerns about the consistency and reliability of future dividend payments for investors. Therefore, while there were periods with good coverage, many years show unsustainable payout policies, indicating a trend that is more bad than good overall.

Dividends Well Covered by Cash Flow?

Dividends well covered by free cash flow indicate that a company generates sufficient cash from its operations to not only sustain but also potentially grow its dividend payouts without compromising its financial health.

Examining the free cash flow (FCF) and dividend payout trends for Wynn Resorts (WYNN) from 2003 to 2023, inconsistencies in covering dividends through FCF are clear. Notably, from 2006 to 2020, the cover ratio is often negative or less than 1, suggesting periods where payouts exceeded the FCF. For instance, in 2006 and 2007, the cover ratio stood at -1.32 and -1.75, revealing cash flow shortages relative to dividends paid. Conversely, years like 2009, 2010, 2011, and 2013 show healthier cover ratios (9.24, 1.54, 0.78, and 1.01 respectively). The erratic nature of these figures highlights potential risks to dividend sustainability. The recent cover ratios from 2020 to 2023, although negative or very low (0.11 in 2023), further stress the importance of creating stable and reliable cash flow sources to ensure dividend security for investors. Overall, Wynn Resorts shows a variable trend in covering its dividends with free cash flow, indicating significant fiscal fluctuations and raising concerns about consistency and long-term dividend reliability.

Stable Dividends Since the Company Began Paying Dividends?

A consistent history of dividend payments provides confidence to investors that the company prioritizes shareholder returns and maintains financial stability.

Over the past 20 years, Wynn Resorts (WYNN) has exhibited significant fluctuations in its dividend payments. For the first three years (2003-2005), no dividends were paid. From 2006 onwards, the company started paying dividends but the amounts have been highly inconsistent. Notably, there was a 0% dividend per share during periods such as 2008, 2020, 2021, and 2022. However, none of the drops exceed the 20% threshold in year-on-year comparisons. This highly volatile dividend history suggests that Wynn Resorts may not present a reliable income stream for long-term, income-focused investors. The occasional high dividends might be appealing, but the inconsistency and missing dividend periods create uncertainty. This trend would be seen as negative for those prioritizing stable and reliable dividend income.

Dividends Paid for Over 25 Years?

Explain the criterion for Wynn Resorts (WYNN) and why it is important to consider

This criterion examines whether a company has consistently paid dividends to its shareholders for over 25 years. This long-term commitment to dividend payments is often seen as a sign of financial stability and a robust business model.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases are crucial as they indicate a company's confidence in its future earnings, enhance shareholder value, and reduce the number of outstanding shares.

Examining Wynn Resorts (WYNN)'s stock repurchase behavior over the past 20 years, we notice that the company has performed reliable repurchases in seven of those years: 2008, 2012, 2013, 2015, 2019, 2022, and 2023. With an average repurchase rate of about 1.97, this trend is modest. While it suggests some level of commitment to returning value to shareholders, the periods of ***increase*** in shares, such as from 2003 to 2011, may indicate dilution concerns or equity financing. Nevertheless, the recent years' increased focus on repurchases may suggest a positive outlook. Overall, the trend could be viewed as moderately good, balancing periods of increased shares.