Dividend Idea: The Company Behind the Oldest Major Sporting Event in America
15 Years of Dividend Hikes
The Company Behind the Oldest Major Sporting Event in America
Intro
It owns one of the most recognizable pieces of real estate in American sports, and it has systematically turned that brand into a diversified gaming and entertainment empire spanning live racing, historical racing machines, regional casinos, and wagering technology.
In 2025 it delivered record net revenue and record Adjusted EBITDA for the second consecutive year, with the crown jewel producing the highest TV ratings for its flagship event in nearly 40 years.
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Churchill Downs (CHDN)
Churchill Downs Incorporated (CHDN) is a Louisville, Kentucky–based racing and gaming company operating the Kentucky Derby venue, a growing network of Historical Racing Machine (HRM) venues in Kentucky and Virginia, regional casinos, and the TwinSpires wagering technology platform.
Founded in 1875, it has evolved from a single racetrack into a vertically integrated gaming platform generating roughly $2.9 billion in trailing revenue.
Low Yield, Massive Payout Room: 15 Years of Hikes
Churchill Downs pays $0.44 per share annually, a 0.52% yield, with an 8.15% payout ratio and a 5-year dividend-growth rate of +41.00%.
That ~8% payout ratio is one of the lowest you’ll find in any dividend-growth company—meaning the company retains nearly all its earnings to fund expansion, acquisitions, and capex while still hiking the dividend.
The 15-year streak reflects management’s commitment to returning capital consistently, backed by a diversified, cash-generative business model that does not depend on a single revenue stream to sustain the payout.
Q1 2026: Record EBITDA, 20% EPS Beat
For Q1 ended March 31, 2026, Churchill Downs reported revenue of $663 million, up 3.2% year-over-year, net income of $83 million, and Adjusted EBITDA of $257 million (38.8% margin), per the April 22, 2026 press release on GlobeNewswire.
Adjusted EPS came in at $1.21, beating consensus of $1.00 by 20.4%, driven by a $17 million lift from Kentucky HRM venues and a $5 million increase from other segments.
The company also cut revolver debt with strong operating cash flow during the quarter, signaling disciplined capital allocation alongside continued expansion.
Growth: HRM Expansion and Kentucky Derby Upgrades
Churchill Downs’ growth is running on two tracks simultaneously. The Kentucky HRM and Virginia HRM venues drove the bulk of Q1 revenue growth, and the 2026 Kentucky Derby is expected to generate $15–$20 million of incremental Adjusted EBITDA thanks to an NBC broadcast renewal, additional Derby week race days, stronger sponsorship, and wagering growth.
On the physical side, the Victory Run project—adding premium suites, box seating, and dining—is expected to be completed in time for the 2028 Kentucky Derby, extending the venue’s revenue capacity over the next investment cycle.
The 1875 Race That Became a National Institution
The Kentucky Derby has been run every year since 1875—including through two World Wars, the Great Depression, and a global pandemic—without a single cancellation, making it the longest-running major sporting event in the United States.
The 2025 race produced the highest TV ratings in nearly 40 years, which is remarkable for a two-minute event competing against a fragmented streaming landscape. That cultural durability is not just trivia; it directly underpins the company’s pricing power, sponsorship revenue, and wagering handle.
Understanding the business is only the first step. The next question is whether the stock still offers an attractive opportunity.
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