Galaxy Entertainment Group (GEG) could further raise its dividend payout ratio over the next three years as strong free cash flow and a solid balance sheet provide ample capacity for higher shareholder returns, according to a CLSA investment memo.
The brokerage noted that the Macau casino operator has gradually increased its dividend payout from 32 percent in 2023—the first year after Covid-related restrictions were lifted—to 50 percent in 2024 and 58 percent in the first half of 2025. ‘We still see scope for a higher payout, despite its prudent balance sheet approach,’ CLSA analysts Jeffrey Kiang and Leo Pan wrote in the report.
CLSA currently assumes Galaxy will maintain a 60 percent payout ratio in its forecasts, but suggested it could ‘comfortably increase to at least 69 percent from 2025 to 2027 if it were to return all recurring free cash flow to shareholders.’ The broker estimated Galaxy will generate about $3.4 billion (HK$26.4 billion) in recurring free cash flow to equity holders from 2025 to 2027, compared with projected dividends of $2.5 billion (HK$19.4 billion) based on the current 60 percent payout assumption.
The report highlighted Galaxy’s ‘deep pockets,‘ with net cash of HK$34.8 billion ($4.48 billion) as of the third quarter of 2025. CLSA said this is sufficient to fund new investments—potentially $1.5 billion (HK$11.7 billion)—and provide a cash runway of more than five years even under adverse business conditions. ‘Capital optionality remains broad,’ Kiang and Pan wrote, adding that expansionary capital expenditure for Galaxy Macau Phase 4, estimated to peak in 2026, should further strengthen the group’s cash flow profile.
CLSA reiterated its Outperform rating and maintained a 12-month target price of HK$50.50 ($6.50) per share, representing a 25 percent upside from the current price of HK$40.24 ($5.18). The research house cited Galaxy’s robust balance sheet, strong recurring earnings, and positioning in the premium mass gaming segment as key supports for dividend growth and share performance.
‘Galaxy remains one of our top picks in the Macau gaming space as we believe its entertainment event strategy positions it well to deliver solid revenue market share with upside risks to the dividend payout ratios,’ CLSA wrote in the memo.
