However, in April 2015, Wynn announced it would cut its quarterly dividend by two-thirds, returning to a $0.50 per share payout. After years of falling revenue and operating earnings, CEO Steve Wynn repeated his view that he didn't want to have the company sustain its previous dividend purely by using debt financing. As the CEO sees it, such moves can conceal deteriorating corporate fundamentals, and that's not something Wynn is interested in doing.
Wynn also has major expansion plans. The new Wynn Palace on the Cotai Strip in Macau has already put huge capital demands on the company, and it will take some time to reach full profitability. In addition, the proposed casino outside Boston is a lot earlier in the development process, and keeping plenty of untapped capital on hand should help Wynn avoid any negative impact from unforeseen challenges with that project.
When will Wynn Resorts' dividends rise again?
At this point, Wynn Resorts is paying out a respectable portion of its earnings to shareholders as dividends, with the current payout ratio exceeding 60%. That doesn't bode well for regular-dividend increases in the immediate future, largely because Wynn would likely be reluctant to make a boost of anything less than a quarter per share, and doing that now would push the payout ratio into dangerous territory.
However, Wynn has a couple of longer-term options. First, many expect a huge bounce in Wynn earnings next year, with some forecasts exceeding $5 per share. That would support a $0.25 per share increase to $0.75 per share without adversely affecting the payout ratio -- as long as the earnings gains actually occur.
The other possibility is that Wynn could return to its special-dividend policy. Paying out $1 to $2 per share in special dividends in combination with regular dividends would give Wynn shareholders some reward for sticking with the casino giant while also helping the company maintain flexibility in its capital policies.
Wynn Resorts has treated shareholders well for a long time, and the company has done a good job, even through tough times of finding ways to reward investors. If the business rebounds for the rest of this year and next, shareholders should expect Wynn to find a way to share the gains with its investors.
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Dan Caplinger owns shares of Wynn Resorts. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .