Casino stocks have run into quite the spate of bad luck.
Heavily exposed to the Asian gaming wonderland of Macau, Las Vegas Sands and Wynn Resorts have lost 30 and 40 percent of their value in a year, respectively. The declines come as Macau gaming revenues drop dramatically due to a corruption crackdown from the Chinese government.
Macau Chief Executive Fernando Chui Sai On gave little reason for encouragement on Monday, when he urged the Chinese special administrative region to reach beyond gaming to create a more diversified and less China-reliant economy. Macquarie analyst Chad Beynon called the speech "very negative" for the gaming companies.
One bedrock of support for the stocks remains the relatively rich dividend payouts. Wynn and Las Vegas Sands are paying out dividend yields of nearly 5 percent, potentially making them attractive to yield-chasing investors.
The question is whether the fat payouts can continue.
"Historically, casino companies do not pay dividends because they have these big, chunky projects. And while it's been nice to bring in a dividend, because we don't have the historical context, it's hard to figure out what the right dividend yield should be," Beynon said. "If the fundamentals continue to worsen, then the dividend will not be supported at this level."
Still, the analyst said that with cash flow from operations still running higher than the dividend payout, the big casino company dividends still appear "sustainable here."