Now more than ever, a comfortable retirement depends on secure, stable investments. Unfortunately, the right stocks for retirement won't just fall into your lap. In this series, I look at 10 measures to show what makes a great retirement-oriented stock.

Among casino companies, Las Vegas Sands has been on the cutting edge for years. Despite its powerful status with roots dating back to the founding of Las Vegas, the company hasn't been content to stay close to home. Instead, it has launched groundbreaking forays around the world, helping to turn the Asian gaming capital of Macau into what it is today. With China starting to leave its hypergrowth phase behind, though, can the casino giant find new success elsewhere? Below, we'll revisit how Las Vegas Sands does on our 10-point scale.

The right stocks for retirees
With decades to go before you need to tap your investments, you can take greater risks, weighing the chance of big losses against the potential for mind-blowing returns. But as retirement approaches, you no longer have the luxury of waiting out a downturn.


Sure, you still want good returns, but you also need to manage your risk and protect yourself against bear markets, which can maul your finances at the worst possible time. The right stocks combine both of these elements in a single investment.

When scrutinizing a stock, retirees should look for:

  • Size. Most retirees would rather not take a flyer on unproven businesses. Bigger companies may lack their smaller counterparts' growth potential, but they do offer greater security.
  • Consistency. While many investors look for fast-growing companies, conservative investors want to see steady, consistent gains in revenue, free cash flow, and other key metrics. Slow growth won't make headlines, but it will help prevent the kind of ugly surprises that suddenly torpedo a stock's share price.
  • Stock stability. Conservative retirement investors prefer investments that move less dramatically than typical stocks, and they particularly want to avoid big losses. These investments will give up some gains during bull markets, but they won't fall as far or as fast during bear markets. Beta measures volatility, but we also want a track record of solid performance as well.
  • Valuation. No one can afford to pay too much for a stock, even if its prospects are good. Using normalized earnings multiples helps smooth out one-time effects, giving you a longer-term context.
  • Dividends. Most of all, retirees look for stocks that can provide income through dividends. Retirees want healthy payouts now and consistent dividend growth over time -- as long as it doesn't jeopardize the company's financial health.

With those factors in mind, let's take a closer look at Las Vegas Sands.

Factor

What We Want to See

Actual

Pass or Fail?

Size

Market cap > $10 billion

$33.2 billion

Pass

Consistency

Revenue growth > 0% in at least four of five past years

5 years

Pass

 

Free cash flow growth > 0% in at least four of past five years

4 years

Pass

Stock stability

Beta < 0.9

3.62

Fail

 

Worst loss in past five years no greater than 20%

(94.2%)

Fail

Valuation

Normalized P/E < 18

34.55

Fail

Dividends

Current yield > 2%

3.1%

Pass

 

5-year dividend growth > 10%

NM

NM

 

Streak of dividend increases >= 10 years

NM

NM

 

Payout ratio < 75%

41.5%

Pass

       
 

Total score

 

5 out of 8

Source: S&P Capital IQ. NM = not meaningful; Las Vegas Sands paid its first dividend in March 2012. Total score = number of passes.

Since we looked at Las Vegas Sands last year, the company has made monumental progress, gaining three points. Faster free cash flow growth helped boost its score, but much more important was its beginning to pay a dividend. The stock, though, is roughly flat over the past year.

Las Vegas Sands was a pioneer in going beyond the nation's borders. Ever since its success in Macau, rivals Wynn Resorts , MGM Resorts , and Melco Crown have duked it out in a series of escalating battles in the Asian gaming capital, as new casinos go up and the gaming district expands beyond its original borders onto the Cotai Strip.

But in its most recent quarter, Sands didn't give investors the results they've come to expect. Although its market share in Macau has risen thanks to its newly opened Sands Cotai Central, the company didn't get the results it expected from the Marina Bay Sands casino in Singapore. With overall revenue down more than 20% in the third quarter, it's looking like Sands may not be as lucky in Singapore as it was in Macau.

Moreover, Sands has chosen not to get involved in online gaming, which could become legal in the near future. With International Game Technology and Bally Technologies earning the first online gaming licenses in the U.S., Sands could regret its decision if its U.S. rivals can tap part of the more than $30 billion in annual online gaming revenue.

Like many companies, Las Vegas Sands joined the growing bandwagon of stocks paying special dividends to shareholders. With the company declaring a $2.75-per-share payout, CEO Sheldon Adelson will reap a $1.2 billion payday, thanks to his huge stake in Sands.

For retirees and other conservative investors, Las Vegas Sands' decision to pay a dividend makes the stock more enticing. But at extremely rich valuations and with questions about its future growth, even a three-point upgrade in its score isn't enough to make the stock a sure bet in most retirement portfolios.

Keep searching
Finding exactly the right stock to retire with is a tough task, but it's not impossible. Searching for the best candidates will help improve your investing skills, and teach you how to separate the right stocks from the risky ones.

This short article only scratches the surface of what Sands is doing these days. To find out a lot more about the company as well as our top gaming analyst's views on whether Las Vegas Sands is a buy, take the next step and read our research report on the casino giant. We're providing a full year of analyst updates to go with it, so make sure to claim your copy today by clicking here.

Add Las Vegas Sands to My Watchlist, which will aggregate our Foolish analysis on it and all your other stocks.

The article Will Las Vegas Sands Help You Retire Rich? originally appeared on Fool.com.

Fool contributor Dan Caplinger has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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