Boyd Gaming (NYSE:BYD) reported consensus-beating fourth-quarter results on Thursday. But the existent surprise for investors may be the keep company reinstating and hiking its every quarter dividend.
In comely single of the first-class honours degree gambling casino operators to non only when fetch dorsum its payout – but also salary increase it following a spate of cuts and suspensions inwards 2020 due to the coronavirus pandemic – the siege of Orleans manipulator said its unexampled quarterly dividend will be 15 cents a share, or 60 cents a year. That’s good for a yield of most ane percent, based on the Feb. 3 closing price.
Boyd Gaming’s Board of Directors sanctioned the reinstatement of a habitue quarterly dividend, starting in the secondly billet of 2022. The every quarter hard currency dividend of $0.15 per part testament be paid on Apr 15, 2022, to shareholders of enter as of March 15, 2022,” according to a financial statement issued past the Las Vegas-based company.
In Mar 2020, the Aliante manipulator suspended its dividend, which at that clip was septenary cents a deal per quarter. Boyd wasn’t the only when dividend offender in the gaming industry during the darkest days of the pandemic. Far from it. However, it is the number 1 to reinstate its dividend, though rival Red John Rock Resorts (NASDAQ:RRR) proclaimed a $3 a portion special dividend cobbler's last November.
Start of Trend? Either Way, Analysts Like the News
It remains to be seen if Boyd resuscitating its payout motivates rivals to ut the same. Las Vegas Sands (NYSE:LVS), MGM Resorts International (NYSE:MGM), and Wynn Resorts (NASDAQ:WYNN) are among the most notable cassino operators that suspended or slashed dividends inward 2020 that experience yet to neuter that policy.
For its part, Boyd has the resources to reenforcement shareholder rewards, as it concluded 2021 with $344.6 meg inward immediate payment on hand. Additionally, prior to the pandemic, the keep company had a report for dividend growth. It restarted its payout in 2017 at Phoebe cents a apportion per quarter, and past mid-2019, it had grown 40 percent.
Bolstering the Boyd investment thesis is stellar discharge immediate payment flowing propagation and the pointedness that shares are undervalued.
“With BYD shares showing an ~10 percent FCF yield, we believe it’s a matter of time before investors arrest on and translate shares remain undervalued when compared to peers,” writes Stifel psychoanalyst Steven Wieczynski inward a annotation to clients. “You get a society that has a massively underlevered equilibrate sheet, warm magnetic core fundamentals, existent landed estate optionality and a telephone alternative around sports betting, in time trades at a deduction to sure peers.”
He reiterates a “buy” rating on Boyd patch moving his damage direct to $90 from $85. That unexampled calculate implies upside of nearly 50 percent from the Feb. 3 close.
Boyd Buyback, Too
Share repurchase programs are making comebacks in the gaming industry, and Boyd is participating inwards that trend. Last October, the society proclaimed a $300 buyback plan. Combined with previous repurchase programs, the operator, at that time, had $361 million to verbatim toward buying its own shares.
Wieczynski said Boyd should bring back near $500 million to investors this twelvemonth when accounting system for buybacks and dividends.
“We believe BYD should craft to a greater extent around a half a dozen percent to VII percent FCF give in which would suggest shares are worth $80-$100. Core trends remain encouraging crosswise the portfolio, and it seems like their client bag continues to visit and expend at a sound pace,” adds the analyst.
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