Melco Crown Chasing Wynn and Las Vegas Sands -- With Dividends

The company is now even moving toward paying its shareholders a dividend. Melco Crown declared a special dividend of $0.34 per American Depositary Receipt (ADR), or $0.115 a share. The company also proposed a dividend policy of 30% of net income. This dividend news has been floated ahead of time by some analysts, but a 30% payout of income initially is strong.

The company earned $0.40 per ADR, up from $0.195 a share in the fourth quarter of 2012 and $0.02 better than the Thomson Reuters estimate of $0.38. Revenue grew 26.6% to $1.39 billion from $1.1 billion a year ago. Casino revenue was $1.36 billion, up 27% from a year earlier. Casino revenue is generally the net of what a casino takes in on bets of all forms and what it paid out in winnings.

Melco Crown’s biggest casino in Macau is the City of Dreams, the world’s second-largest casino. Macau is the world’s largest gambling center, generating seven times the gambling revenue of Las Vegas. The company is controlled by Australian gambling billionaire James Packer and Lawrence Ho, whose family is prominent in gambling in Asia.

Its results were helped by the growing premium mass-market gambling business. This business caters to high-stakes gamblers who pay cash to play at the casinos and come on their own. This is a more profitable market segment for casinos than VIP gamblers, who come to casinos on junkets arranged by middlemen.

Wynn Resorts Ltd. (NASDAQ: WYN) has the Wynn Macau operations, which has helped to bolster the operational success in Las Vegas. The Sands China Ltd., controlled by Las Vegas Sands Corp. (NYSE: LVS), also competes for the premium mass-market gambler. Interestingly enough, Wynn pays a 2.3% dividend yield and Las Vegas Sands pays its investors a 2.6% dividend yield. Wynn Resorts shares had gained $2.02 to $223.14. Las Vegas Sands shares rose $0.18 to $78.06.

Melco Crown also operates the Altira casino in Macau. It is building a new casino in Macau, Studio City, set to open in 2015 and is working on a City of Dreams complex for Manila, set to open this year. Melco Crown ADRs were up $0.02, or 0.2%, to $42.38. The Melco Crown ADRs are up 8% in 2014 after rising 133% in 2013.