Gaming and entertainment company Tabcorp Holdings Limited (ASX: TAH) is expected to report its 2014 full year results later this week, so here's our preview of what shareholders could expect with respect to the dividend.
Shares in Tabcorp are down today, but then so is the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO). As a large cap stock, Tabcorp shares tend to follow the direction of the market.
At the current price of $3.45, Tabcorp is paying a fully franked dividend yield of 4.6%, based on a rolling twelve month dividend of 16 cents. Commsec's forecast suggests the company will pay 8 cents in dividends, maintaining the full year dividend yield at 4.6%.
But dividends could increase in future years, thanks to the company's acquisition of Canberra betting agency, ACTTAB last week. The company says the purchase will cost $105 million, but ACTTAB's totalisator and sports bookmaking licences are 'highly attractive'.
A massive potential special dividend ahead?
But investors in Tabcorp will also be hoping the company is successful in challenging the Supreme Court's decision in favour of the Victorian government. Tabcorp had claimed $686.8 million from the state government, over the loss of its poker machine licence in 2012. Should Tabcorp be successful, investors could potentially see a juicy special dividend to spice up returns.
The Australian Financial Review (AFR) reports that Citi analyst Michael Goltsman values the claim as being worth an additional 94 cents per share for Tabcorp.
Unfortunately, we believe this case could drag on for years yet, and Tabcorp has a harder legal position to challenge than its compatriot Tatts Group Limited (ASX: TTS). Tatts was awarded more than $500 million by the Supreme Court, but the Victorian government is appealing the decision.
Investors may want to instead look to companies like Telstra Corporation Ltd (ASX: TLS) or Insurance Australia Group (ASX: IAG) with their juicy fully franked dividend yields of 5.2% and 6.1% respectively. Alternatively, if you are after our best dividend idea, you don't have to look too far…
