Las Vegas Sands to Pay a Special Dividend of $2.26B Next Month!

Nov 26, 2012 -

Las Vegas Sands is most notably known for owning and operating The Venetian Resort Hotel Casino (“The Venetian Las Vegas”), a Renaissance Venice-themed resort and The Palazzo Resort Hotel Casino (“The Palazzo”). 

Is it worth it to buy LVS for the special dividend that they will be paying out on December 18th to those on record as of December 10th?

The general rule is that it is not worth it to buy a stock just for one dividend payout. If the only factor affecting the stock price was the company paying out a dividend, then you would expect the stock price to decrease by the dividend amount. In other words, in theory, if a company was worth $20 and it paid out a dividend for $2, then the company is now worth $18 because its cash decreased by $2. But we all know, this is not always the case as we've seen with AGNC, which has gone up in value as dividends have been paid.

So the question is still whether or not we should buy LVS solely for the dividend. Let us take a look at the chart.

It looks like we've hit resistance at around $44, which happens to also be the 20 day moving average line. In addition, we see declining volume leading up to today. Now if Las Vegas Sands Corp is paying out a dividend of $2.75, we just need to make sure the stock doesn’t fall below $41.28 (today’s closing price of 44.03 less dividend of $2.75). Of course this breakeven point is before taxes and trading commissions. That seems to be a pretty good level of support considering it bounced off of that about a week ago.

Now if you are looking to buy LVS, it is now trading at about $44 per share. This means if you wanted to earn $500 from the dividend (before commissions and tax), you would need to buy 182 shares. This would cost you about $8,000. This is basically an approximately 6.25% return in a little over two weeks should you buy tomorrow. Great return, but you’ll need to make sure the stock doesn’t fall in value such that it wipes out your dividend gains. Alternatively, you could hold on to the stock and wait for it to come back. But there’s no guarantee of that either.

Disclaimer: Article is written for informational purposes. It isn't intended as investment advice.
Disclosure: I have no position in LVS.
 
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