Fun With Dividends

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.

We've all heard Disney (NYSE: DIS  ) cry "Uncle" and Six Flags (NYSE: PKS  ) whine about its heavy debt burden when the economy isn't smiling just right. Why then, has fellow operator Cedar Fair (NYSE: FUN  ) seemed to move forward in good times and bad?

When Cedar Fair sees a wall of worry, it simply builds a thrill ride to scale it. It follows that the company raised its quarterly distribution yesterday, to $0.45 a unit. At yesterday's close, that gives the tax-advantaged limited partnership a yield of 5.2%.

At this rate, Cedar Fair will have raised its distribution for 17 consecutive years. Readers of our Income Investor newsletter know all about the beauty of buying into a company that perpetually hikes its payout.

In fact, Cedar Fair has raised its quarterly payout 13 times over the past 10 years. Sure, the hikes appear petty at first glance; however, over that decade, the distributions have grown by 80%. Compare that to fixed income investments with flat payouts or money market funds with their paltry interest in recent years, and stomaching some more risk with income-producing equities seems like an appealing alternative.

Consider paint manufacturer Sherwin-Williams (NYSE: SHW  ) , which has hiked its dividend every year since 1979. Pitney Bowes (NYSE: PBI  ) has done so for 22 straight years. While investors shouldn't turn their backs on high-growth companies that reinvest their earnings to grow their businesses, there are clearly some notables that have managed to excel on both fronts.

Some can even pack a little octane in the tank. Cedar Fair was one of the earliest recommendations in our newsletter that became Motley Fool Hidden Gems and it has certainly performed well. The units have risen by 40% over the past year, and that's before you tack on the meaty quarterly distributions. Now, that's some ride!

With summer just around the corner, have you made it out to our Travel Center to look into the many ways to plan your next vacation online? Which parks will be opening the best scream machines in 2004? Do you prefer steel or wood coasters? All this and more -- in the Roller Coaster Loving Fools discussion board. Only on Fool.com.

Longtime Fool contributor Rick Munarriz loves his amusement parks. He went to Cedar Fair's Cedar Point last year and will be off to the company's Knott's Berry Farm in California come June. He owns shares of Disney as well as units in Cedar Fair.


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