Wynn Macau, Limited (HKG:1128) has announced that it will pay a dividend of HK$0.185 per share on the 17th of September. This makes the dividend yield 5.6%, which is above the industry average.

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Wynn Macau's Future Dividend Projections Appear Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, Wynn Macau's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

The next year is set to see EPS grow by 122.7%. If the dividend continues on this path, the payout ratio could be 44% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for Wynn Macau

Wynn Macau's Dividend Has Lacked Consistency

Looking back, Wynn Macau's dividend hasn't been particularly consistent. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. Since 2016, the annual payment back then was HK$0.60, compared to the most recent full-year payment of HK$0.37. Doing the maths, this is a decline of about 5.2% per year. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. We are encouraged to see that Wynn Macau has grown earnings per share at 52% per year over the past five years. Wynn Macau is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

We Really Like Wynn Macau's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Wynn Macau has 4 warning signs (and 2 which are significant) we think you should know about. Is Wynn Macau not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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