The entertainment sector is returning dividend yields above the average Dow stock. The Dow average yield is around 3.5% now, better than most but not as good as the 4% or better some in the entertainment sector are paying. Earnings and yields have helped to keep the sector up as a whole, with most stocks slightly up for the year. However, expectations for earnings growth among the entertainment stocks is waning and putting them under pressure. Many of the stocks in the sector are heavily shorted and could provide even higher yields in the near future.
Movies are always popular and Regal Entertainment (RGC) is leading the group with a 6% yield. Regal Entertainment is widely recognized as a leader in the movie viewing business and has at least been treading water in regards to earnings. The stock is very affordable, trading in a range between $11.46-$14.74 over the last 12 months, which makes it an attractive buy for dividend seekers. Compared to others in the group it is fairly valued with a p/e around 15.
Escalade (ESCA) is a leading manufacturer of indoor gaming tables and other home sporting goods. The company produces tables for ping pong, billiards, Foosball and hockey. Escalade also produces office and graphic arts materials as part of a diversified manufacturing portfolio. Escalade is priced much lower than Regal, about $5.75 at this time, but is comparable in other ways. On a valuation basis they are both expected to earn about the same in relation to share price and both have similar yields. Escalade, however, is only paying $0.32 annually compared to Regal's $0.84 per share. Based on short ratio's Regal may be in for some rocky times. Regal has a short ratio close to 16%, while Escalade is closer to 1.5%.
Cedar Fair (FUN) operates 5 large scale amusement parks and several resort hotels and marinas in the Great Lakes region. The company has seen steady earnings growth over the last few years and has reported a 5% gain so far this year. The stock has been trending up and is trading near a five year high. The stock is more expensive the previous two based on share price (around $32.00) and valuation (p/e around 19) and pays a little less in the way of yield percent, around 5%. However, this stock is paying the second highest annual dividend in the group, $1.60 per share and has the lowest short ration, about 0.40%.
Ambassadors Group (EPAX) is a travel service that markets and coordinates educational trips for business professionals, athletes and students. The company remains profitable but earnings have been shrinking; Analysts are expecting a huge drop in earnings over the next twelve months. Comparatively Ambassador Group is fairly valued around 15.5 times earnings and pays a nice dividend yielding 4.3% at the current stock price. However, the earnings expectations and massive short ratio (16%) are not attractive.
Six Flags (SIX) has been performing well over the last twelve months, surprising investors and analysts alike with its earnings. The stock has seen a nice run up in value as investors chased the earnings and yield. Now the stock is over valued compared to the rest of the group and trades a whopping 47 times earnings. This, added to the 16% short ratio, make it one of the least attractive in this grouping. The dividend of $2.40 per share is still yielding around 4.1%, higher than the average Dow stock, but not as good as Escalade or Cedar Fair.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.