Take a Gamble On The First Ever Casino REIT, Penn National Gaming, Inc. (PENN)

Wynn Resorts, Limited (NASDAQ:WYNN) is the only other casino stock listed that pays a dividend besides Las Vegas Sands. Wynn currently pays a dividend that yields around 1.8%. Wynn’s 3Q results saw EPS come in at $1.48, compared to consensus of $1.34 on better than expected Macau EBITDA segment results. Wynn recently announced a special dividend of $7.50, which does not include its regular quarterly dividend of $0.50. Wynn also has plans to boost its quarterly dividend by 100% starting in 2013.

Las Vegas Sands Corp. (NYSE:LVS) is one of the top casino stocks that might be pushing for a REIT conversion. This casino company currently pays the highest dividend yield of our five stocks listed at a 2.3%. Like Wynn, Las Vegas Sands also announced a special dividend, one that equals $2.75 per share. Given its strong free cash flow situation, Las Vegas Sands is also boosting its dividend – by 40% to $0.35 per share quarterly. Las Vegas Sands has one of the better balance sheets and some of the best growth prospects – hence its premium P/E of 25x. We believe that there is still value to be found in Las Vegas Sands’ shares as the company has opportunities to unlock value by monetizing non-core assets, or even exploring REIT conversion. Billionaire investor and founder of Citadel Investment Group Ken Griffin was one of the key firms loving Las Vegas, having upped his stake over 50% (see Ken Griffin’s newest picks).

In considering how to play this realm, we believe that Penn may be setting the precedence with its first-in-industry plans to form a casino REIT. The stock is up over 25% in the last week on the news, despite having the lowest five-year expected earnings growth rate at 7% of all five stocks listed, and one of the lowest net profit margins, at 9%. We believe that other casino stocks will explore similar moves to unlock value, with Las Vegas Sands being one of the top candidates.