The seasonal amusement park business is kicking into high gear, and at least Cedar Fair
Getting the turnstiles turning in the right direction was imperative for Cedar Fair. It had suffered a 2.5% dip in attendance at its chain of parks last year. Even with a decent showing in June, attendance so far through 2005 is off by 3%.
That's OK, though. July and August are the big months in the regional amusement park business. Even though we are done with half of the year, Cedar Fair has reported more than two-thirds of its annual revenue in the latter half of the year. More importantly, the September quarter's profit has historically been more than the year's entire net income.
That's why having some favorable momentum heading into the park's most significant quarter is a good thing. It's also a promising sight for income investors, since Cedar Fair trades as a limited partnership. Earlier this year, the company raised the dividend distribution on its units for the 18th consecutive year.
That consistency and its beefy 5.7% yield have made Cedar Fair a popular investment for those angling for income. Keeping its streak of payout hikes going may be a good way to get the stock showing up on more income investing radars, but to do that, Cedar Fair will have to keep growing as a company.
Rival Six Flags
So let's see what Cedar Fair has in store for its unit holders this summer. If the weather is nice and the patrons keep coming, another distribution hike come 2006 would seem like a near certainty.
- Cedar Fair and Six Flags posted solid revenue growth this past quarter, though expenses could have been kinder.
- Then again, not all companies believe that owning amusement parks is a good idea.
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Longtime Fool contributor Rick Munarriz has been known to chase a few coasters with his family over the summer. He owns shares in Six Flags and Disney, as well as units in Cedar Fair. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.