Boyd Gaming had a productive first quarter of 2019. The casino operator has decided to spread the wealth and has announced that it will increase the quarterly dividend payout to long-term investors to seven cents a share, instead of the previous six-cents a share. The dividend is expected to be paid on July 15.
The dividend increase equates to an improvement of 16.7%, which is better than the average payout increase given to Standard & Poor’s (S&P) 500 investors last year. That average was just 13.48%. For 2019, the index is expected to provide an average dividend increase of about 6%, meaning Boyd is performing better than the S&P 500 on a continued basis.
Boyd had suspended its quarterly dividend years ago, but brought it back in 2017. At that time, it was paying $0.05 a share and the latest payouts represent a 40% climb. Despite a drop in revenue impacting all casino companies, thanks in part to the US-China trade war, Boyd is remaining strong and sees a bright future. The company’s CEO, Keith Smith, explains, “Our robust and growing free cash flow gives us the ability to continue pursuing a balanced approach to creating shareholder value through investments in accretive growth opportunities, deleveraging, share repurchases and dividends.”
Smith is right on the money. The company’s cash flow has been increasing – in 2016, it had cash flow of about $300.34 million. This increased to $434.53 million last year, according to earnings reports, and its free cash flow tally increased from $139.98 million to just under $273 million over the same period.
Last year, Boyd bought back $58 million worth of its stock. At the end of the year, it was holding 111.8 million shares, helping it reduce its dividend expenses.
However, the increase in dividend, which will be paid to all investors of record as of June 17, has to be weighed against performance. If the dividend had been paid out based on the company’s closing stock price from last Friday, the yield would have been just 1.1%. This is below the 1.96% yield seen with MGM Resorts dividends and well below the 5.49% yield of Las Vegas Sands. On the plus side, Boyd’s dividend increase is 20.6% greater than that of either of those competitors.