Cedar Fair’s Share Price Takes Roller Coaster Ride, Dividend Distribution Yields 5.5% (FUN)

While the Cedar Fair, L.P.’s (NYSE:FUN) share price managed to recover nearly completely after a wild roller coaster ride over the past 12 months, the company continued raising dividend distribution to its shareholders, which currently yields 5.5%.

After an initial plunge of nearly 15%, the company’s share price went through several ups and downs over the past year but managed to close the trailing 12 months just 8% away from its starting price. However, the company’s dividend distribution rose for the eighth consecutive year and the current dividend yield outperforms its peers in the Entertainment segment of the Services sector.

To take advantage of the upcoming pay date on June 15, 2018, interested investors should take action prior to company’s next ex-dividend date, which will occur on June 1, 2018.

Cedar Fair, L.P. (NYSE:FUN)

Based in Sandusky, Ohio, and founded in 1983, Cedar Fair, L.P. owns and operates amusement parks, water parks and hotels in the United States and Canada. As of May 2018, the company operated 13 parks, as well as two hotels and three campgrounds adjacent to the company’s park locations. The company’s portfolio of amusement parks includes Cedar Point in Sandusky, Ohio; Knott’s Berry Farm near Los Angeles, California; Dorney Park & Wildwater Kingdom in Allentown, Pennsylvania; and Kings Dominion near Richmond, Virginia. Additionally, Cedar Fair manages and operates Gilroy Gardens Family Theme Park in Gilroy, California, and owns and operates the Castaway Bay Indoor Waterpark Resort in Sandusky, Ohio, as well as two gated outdoor water parks

As already indicated, the company’s share price experienced a wild ride over the past 12 months with several twists and turns. The share price started to decline in June 2016 and entered the current 12-month period riding that downtrend. The 52-week high came early in the period when the share price closed at $72.10 on June 30, 2017. Over the subsequent four months, the share price bounced up and down several times but ultimately experienced an overall downtrend and reached its 52-week low of $61.64 on October 30, 2017.

After bottoming out at the end of October, the share price continued oscillating between $70 and $63 until it reached $62.76 on April 13, 2018, which was less than 2% above the 52-week low from the end of October. Since that drop, the share price rallied back and closed on May 23, 2018, at $65.27, which was within 8% of the share price one year earlier. Additionally, that closing share price was nearly 6% above the October low and 60% higher than it was five years ago.

Unlike the volatile share price, the company’s dividend continued its ascent with an eighth consecutive annual dividend hike. Cedar Fair’s current $0.89 quarterly dividend is 4.1% above the $0.855 quarterly distribution from the same period last year. The current quarterly payout corresponds to a $3.56 annualized amount and yields 5.5%, which is nearly 7% above the company’s own 5.1% average dividend yield over the last five years.

In addition to outperforming its own five-year average yield, which rose partially because of the share price decline, Cedar Fair’s current yield is the highest among major dividend-paying companies in the Entertainment industry segment, as well as more than 170% higher than the 2% average yield of the entire Services sector. Furthermore, the company’s current 5.5% yield is nearly triple the 1.83% average yield of all the companies in the Entertainment industry segment and 123% above the 2.44% average yield of the segment’s dividend-paying companies.

The company boosted its annual dividend 94% of the time since starting dividend distribution in 1987. The only two annual dividend distribution cuts occurred when the company cut its annual payout nearly 90% between the $1.92 payout in 2008 and the $0.25 total annual amount in 2010, as illustrated in the chart below. However, the company resumed raising its annual dividends aggressively in 2011 and exceeded its 2008 pre-dividend-cut level by 2013.

Over the past eight consecutive years since the dividend cuts in 2009 and 2010, the company advanced its annual dividend amount more than 14-fold, which corresponds to an average growth rate of nearly 40% per year. The graph above clearly shows that the aggressive growth happened in the first three years after the cuts. However, even disregarding those three years of extraordinary growth, the company’s average annual dividend growth rate over the past five years is still 6.7%.

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