NEW YORK (TheStreet) -- On Dec. 18 Las Vegas Sands (LVS) will be just another domino in a long-line of companies paying a special dividend this year. Sands and other cash rich companies are lining up to take advantage of the current tax rates and likely higher rates on dividend income that could kick in automatically on Jan. 1 (with the expiration of the Bush tax cuts).Triggered by large casino profits, as well as interests in mall and hotel income, Las Vegas Sands plans to reward shareholders by paying out a $2.75 a share special dividend, in addition to the annual dividend of $1.40 a share. That combined dividend payout amounts to an annual dividend yield in excess of 6%. Las Vegas Sands is a newcomer to paying dividends as the company squeezed out a token last year and the yield hovers around 2% today -- excluding the special dividend. Maybe there is more to this? Perhaps there could be a compelling opportunity for investors to benefit for Las Vegas Sands and its repeatable income model?
LVS gets the majority of profits and cash flow from its properties in Asia, especially Macau, the only place where millions of Chinese gamblers legally place bets on games of chance. No new casinos will open in Macao for at least two or three years -- a wide moat gamer!
LVS Lodging REIT and LVS Mall REIT would be Singapore-listed REITs owning the mall assets in Macao and Singapore, while the lodging REIT would own the hotels in Macao, Singapore and Las Vegas. The Singapore REIT market is the most active and mature in Asia, comps have good valuations in the mall and lodging space and the Sing government would likely be favorable toward a transaction relating to Marina Bay Sands, Las Vegas Sands Singapore Asset if they got the listing on Two REITs with market caps totaling over $30 billion. LVS would spin out to existing shareholders shares in the mall and lodging company and those shareholders would then have the option to buy more or sell. Ideally, the management team of LVS would not sell any shares in these entities. Both the mall and lodging REITs would be the fastest growing in their respective property space, the largest, and likely the most sought after by institutional investors that are dedicated to real estate or want a way to participate in the growth of the Asian consumer.
At the time of publication the author held no positions in any of the stocks mentioned. Follow @swan_investor This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.