Cedar Fair Dividend Riding Higher

| About: Cedar Fair, (FUN)

A few weeks ago I wrote an article about Cedar Fair, LP (NYSE:FUN) with the focus on the company's cash distribution plans. The company is a Limited Partenrship, or LP, and pays out "distributions" as compared to dividends. I noted that Cedar Fair planned to pay a sizable fourth quarter distribution with the goal of doubling the total annual distributions from $1 in 2011 to $2 by 2013. On September 8, the company issued a press release that reiterated the company's goal to pay a fourth quarter $0.70 distribution, bringing the 2011 total to $1. With the recent price of Cedar Fair under $21, the projected yield is nearly 5%.

Several other points in the press release that should be of interest to current and future investors:

  • As of September 4, revenues were up approximately $33 million to $857 million, or 4%, through Labor Day Weekend compared to 2010
  • Full-year revenue and adjusted EBITDA guidance were reaffirmed
  • Revenue increases were driven by a 2% rise in attendance, 2% increase in per capita in-park attendance and a 5% increase in out-of-park attendance

Cedar Fair owns and operates nearly a dozen amusement parks with several in Ohio and California. They include Knotts Berry Farm, located not far from Disneyland, Dorney Park in Eastern Pennsylvania and others in Canada, Virginia, Ohio, Minnesota and elsewhere. FUN also owns five hotels and a-several water parks. The importance of the September 4 (or Labor Day) date is that it marks the end of the company's key summer season. After Labor Day, as students go back to school, the company's revenues fall sharply.

Cedar Fair CEO Dick Kinzel noted:

As we head into our award-winning Halloween season, we feel very good about the steadily increasing momentum we are building across our well-maintained and diversified portfolio of parks. Should these trends continue throughout our important Fall season, we will generate full-year net revenues at the high end or slightly above our previous guidance of $975 million to $1.0 billion. At the same time, assuming similar trends, we believe our full-year adjusted EBITDA will be at the middle to upper end of our guidance of $350 million to $370 million.

On the conference call last month, the company noted that the Halloween period had been especially strong in 2010, and management was going to be conservative in its outlook.

The last thing I want to do is gloss over the loss of life, property damage and misery caused by the recent hurricanes. However, I would be remiss if I didn't reveal that I'd been concerned about the effects of Irene and Lee on some of FUN's properties. The fact that the company managed to post a 4% revenue gain in spite of this was a relief.

For those looking for a more expert view of the company, a recent article noted that KeyBanc analysts "Scott Hamann and Lisa Brozewicz sent a note to clients Tuesday saying they were upgrading amusement-park empire Cedar Fair to "buy" from 'hold' after meeting with the company's incoming CEO, Matt Ouimet." They placed a price target of $25 for FUN.

I remain long in Cedar Fair, like the ticker symbol, love the dividend and look forward to seeing that dividend double.

Disclosure: I am long FUN.