Red Rock Resorts (NASDAQ:RRR) Has Affirmed Its Dividend Of $0.25
Red Rock Resorts, Inc. (NASDAQ:RRR) will pay a dividend of $0.25 on the 29th of March. Based on this payment, the dividend yield will be 1.8%, which is fairly typical for the industry.
View our latest analysis for Red Rock Resorts
Red Rock Resorts' Payment Has Solid Earnings Coverage
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Based on the last payment, Red Rock Resorts was earning enough to cover the dividend, but free cash flows weren't positive. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.
Looking forward, earnings per share is forecast to fall by 13.0% over the next year. If recent patterns in the dividend continue, we could see the payout ratio reaching 90% in the next 12 months, which is on the higher end of the range we would say is sustainable.
Red Rock Resorts' Dividend Has Lacked Consistency
Looking back, Red Rock Resorts' 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. The dividend has gone from an annual total of $0.40 in 2016 to the most recent total annual payment of $1.00. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.
The Dividend Has Growth Potential
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Red Rock Resorts has seen EPS rising for the last five years, at 5.6% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
Our Thoughts On Red Rock Resorts' Dividend
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Red Rock Resorts is earning enough to cover the payments, the cash flows are lacking. We don't think Red Rock Resorts is a great stock to add to your portfolio if income is your focus.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 3 warning signs for Red Rock Resorts you should be aware of, and 1 of them is significant. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
