America’s largest gaming company by market value, Las Vegas Sands, has decided to suspend its dividend. The company claims that the coronavirus outbreak has adversely impacted its operations.

Is the industry eyeing a negative dividend?

Las Vegas Sands operates Palazzo and the Venetian and is the second domestic gaming company to suspend its dividend. Before it, Boyd Gaming also suspended dividend payments. With these two companies taking similar steps, the whole industry could be looking at negative dividend action in the weeks to become. Analysts speculate that Wynn Resorts and MGM Resorts International can also follow in their footsteps and eventually declare the suspension of dividends.

LVS Chairman and CEO Sheldon Adelson released a statement, saying, “I know that the dividend is important to all our shareholders, as it is to me.

“I am known for the phrase, ‘yay dividends!’, and I assure you that it is still my mantra.  But a strong balance sheet is also a vital and necessary component to realizing stockholder value in the decades ahead.”

Pandemic shocks the company

Las Vegas Sands increased its dividend less than three months ago for the eighth consecutive year. The coronavirus pandemic has caught the company off guard. Adelson said that he has not seen anything like this pandemic during his 70 years in business. He said that the company has a very strong balance sheet but did not elaborate on it. At the end of the year, the company had about $4.23 billion cash at hand. It is one of the sturdiest companies in the business today. Adelson is also sure that their financial strength will allow them to go ahead with the Macao and Singapore capital expenditure programs they announced previously.

The company has planned to spend about $2.2 billion in Macau but the market is bleeding because of the pandemic. Singapore is where the company runs the Marina Bay Sands. These two markets brought $811 million and $457 million for the company bin Q4 2019. LVS earned $1.39 billion in adjusted property EBITDA.

The company’s investors cannot depend on dividends anymore and will have to stick to stock price increase in the future to receive returns. It may not be as productive for the company since its domestic and international properties are shuttered because of the pandemic. LVS will now focus its strategic opportunities and hopes to go back to the payout issue when it seems like a practical option.