Monarch Casino Joins Ranks of Casino Stock Dividend Payers
Posted on: February 7, 2023, 01:23h.
Last updated on: February 7, 2023, 03:08h.
Monarch Casino & Resort (NASDAQ: MCRI) is joining the sparsely populated ranks of gaming companies that pay dividends. It announced Tuesday a one-time payout, as well as a new quarterly distribution.
The Reno-based casino operator will pay a one-time cash dividend of $5 per share and announced a quarterly payout of 30 cents a share. Monarch Casino’s special dividend is payable on March 15, 2023, to stockholders of record on March 1, 2023.
Commencing in the second quarter of 2023, the Board of Directors has approved the payment of an annual dividend in the amount of $1.20 per outstanding share of Common Stock, payable in quarterly amounts on the 15th day of the third month of each applicable calendar quarter,” according to a statement.
The gaming company’s dividend policy will be reviewed quarterly by the board of directors. For this year, it’s expected Monarch will deliver $5.90 per share in dividends to its investors.
Monarch Casino Balance Sheet Strong
Amid an increasingly strong balance sheet, speculation about Monarch Casino initiating a dividend surfaced late last year.
The company went public in 1993 and hasn’t paid a quarterly distribution over that time. But doing so could bring in a new crowd of investors, particularly because it’s a small-cap stock. Small-cap equities are usually more volatile than their larger counterparts. Dividends are known to blunt some of that turbulence, regardless of market capitalization.
By initiating the quarterly payout, Monarch puts itself in a sparsely populated group among casino operators. Since the onset of the coronavirus pandemic, gaming companies’ preferred method of shareholder rewards has been buybacks, with only Boyd Gaming (NYSE: BYD) and Red Rock Resorts (NASDAQ: RRR) being the regional casino firms showing commitments to growing dividends.
The dividend outlook among Las Vegas Strip operators is even dourer, as MGM Resorts International (NYSE: MGM) offers only a meager, token payout, and Caesars Entertainment (NASDAQ: CZR) doesn’t pay a dividend. In the case of Monarch, the new distribution is a confirmation of long-building balance sheet fortitude.
“The Board of Directors’ authorization of a one-time cash dividend and the initiation of a recurring annual cash dividend highlights the free cash flow generated by our two market-leading properties and our commitment to enhance stockholder value,” said CEO John Farahi in the statement.
Monarch owns just two casino hotels — its namesake venue in Black Hawk, Colo., and Atlantis in Reno.
M&A Possible for Monarch Casino
Following some additions to its Reno property, it’s expected that Monarch will further spruce up that venue. Participating in mergers and acquisitions is also possible because, as Farahi noted, Monarch eliminated its outstanding debt following the expansion at its Colorado casino-hotel.
With our strong balance sheet and ongoing free cash flow growth, we have the financial flexibility to return capital to stockholders through both a one-time dividend and our new recurring dividend, while continuing to invest in our properties and evaluate M&A opportunities that can leverage our operating and development expertise to deliver additional long-term growth,” he added.
Farahi didn’t mention specific takeover targets or regions in which Monarch could evaluate consolidation opportunities.
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