Stock Idea – Cedar Fair L.P. (NYSE: FUN)
Cedar Fair, L.P. (NYSE: FUN) doing business as the Cedar Fair Entertainment Company, is a publicly traded partnership headquartered at its Cedar Point amusement park in Sandusky, Ohio. The company owns and operates twelve amusement parks, two outdoor water parks, one indoor water park, and five hotels in the US and Canada. Cedar Fair also manages Gilroy Gardens under contract with the city of Gilroy, California. The parks are family oriented, with recreational facilities for people of all ages, and they provide clean and attractive environments with rides and entertainment.
For years, Cedar Fair, L.P. (FUN) has been a core portfolio holding of mine. Why? One of the main reasons is the consistent dividend it pays. It may seem odd to find consistency in an amusement park operator. Between the ups and downs of the cyclical travel industry and disposable income levels, one might expect a wild ride. When Cedar Fair sees a wall of worry, it simply builds a new thrill ride with which to scale it (usually a “bigger, badder” roller coaster). This year it raised its quarterly distribution to $0.45 a unit. At the time of this writing, that gives the tax-advantaged limited partnership a yield of 5.32 percent—a winner in my book.
Cedar Fair has a history of raised distributions for numerous consecutive years. And readers of this blog will know all about the beauty of buying into a company that perpetually hikes its payout. Compare that to fixed income investments with flat payouts or money market funds with their paltry interest in recent years.
I never would have known about Cedar Point and therefore Cedar Fair had it not been for family members who took me there as a child (thanks, Mom!) and let me ride the roller coasters. Because of its location (the Midwest), it was only open from April to September. But every day it was packed, and we would wait in long lines just to ride those roller coasters. I cannot remember what ticket prices where then, but they weren’t cheap. So when I became a financial analyst, this was one of the first companies that I decided to research. In addition, during my research, I found that Cedar Fair had all the signs of a good investment—including great management. In addition to the dividend, as a stock this company has performed extremely well. Hey, with a ticker symbol like “FUN,” you can’t miss!
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