Summer Fun Dividends

Matthew Carr By Matthew Carr, Emerging Trends Strategist

Dividend Investing
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We’re inching toward one of the most dreaded times of year around here: the summer, particularly Fourth of July weekend.

That may seem harsh or unpatriotic. But it’s not. It’s just that when you live in an area of national monuments and enormous, must-see national celebrations, your life gets altered because of the gigantic crowds that invade your piece of the country.

Independence Day at the National Mall is one of those celebrations every American should see… but it is pure chaos as flocks of tourists descend on the area.

Traffic – which is already some of the worst in the nation – gets exponentially worse. The Metro – which has plenty of issues on a day-to-day basis – becomes a logjam of lost, wandering out-of-towners.

Hotels and restaurants are booked solid.

On top of that, July is the hottest month in D.C., consistently in the 90s. It’s also muggy…

But, all in all, it’s a great time. Most locals around here go down to the celebrations at least once every few years. Enough to recapture the awe while at the same time reminding themselves why it can be a nightmare.

It is those sorts of “adventures” that make summer fun.

It is the same thing in the investing world.

It’s not a coincidence that Marriott (Nasdaq: MAR) just announced that Netflix (Nasdaq: NFLX) will be available for streaming in its hotel rooms.

Summer is here. Vacation time is itching to be spent. And Americans are going to take to the roads… and they’re going to need places to stay.

So, Marriott is trying to set itself apart as the summer travel season gets underway.

But, for investors, the places those American families are heading offer some great investment opportunities… as well as some nice dividend yields.

A Record Start for Roller Coaster Stocks

Let’s talk about theme parks.

Theme parks aren’t year-round businesses… Well, except for Walt Disney World. These are summertime ventures, when the crowds funnel into the various parks to experience the latest thrill rides or attractions.

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But what is often overlooked is theme park stocks want you to be full-time investors, not fair weather fans. So, they offer nice dividend yields.

Plus, in the first quarter, theme parks also reported double-digit growth, as well as record revenue for what is historically their slowest time of the year.

For instance, Six Flags Entertainment (NYSE: SIX).

At the moment, shares of Six Flags are about 6.4% below their 52-week high of $51.09. That high was set on April 24. But the move lower has increased the dividend yield to 4.5%. It currently pays out $2.08 annually. At the same time, we’re heading into the best time of the year in terms of company revenue…

Six Flags Quarterly Revenue chartSix Flags has already announced the 2015 season is off to a very strong start. The company reported a 16% increase in revenue for the first quarter of $85 million.

Attendance grew 13% year over year in the quarter. Even though total guest spending was flat, this led to record highs in profitability.

It’s also important to note that the majority of Six Flags locations aren’t open during the first quarter. So, this could be the start of a very big year for the company.

Six Flags is the world’s largest regional theme park.

But there’s a smaller company that offers an even higher dividend yield than Six Flags… That’s Cedar Fair L.P. (NYSE: FUN).

Cedar Fair operates 11 amusement parks, four water parks and five hotels.

Kristin gave it a “C” rating in the dividend Safety Net earlier this year. Like shares of Six Flags, Cedar Fair shares are 4.9% below their 52-week high, which was hit at the end of May.

But I think the dividend is safe. Cedar Fair pays out $3.00 annually at the moment (a record level for the L.P.), representing a yield of 5.2%.

And its quarterly revenue trends mirror those of Six Flags…

Cedar Fair Quarterly Revenue chartWhat’s also important to note here is that the company reported record revenue in the first quarter. Just like Six Flags, the company is seeing early-season strength, including season pass sales.

Revenue increased 16% year over year, and a lot of that was driven by Cedar Fair’s only year-round park, Knott’s Berry Farm in California.

Despite all the negativity you hear about the economy on mainstream networks and the constant fear of a collapse, there is optimism.

On top of this, the number of Americans planning to take a summer vacation is up 13% this year. And the number of Americans planning to take a two-week vacation (a seemingly ancient, forgotten concept) increased from 4% to 36% this year.

At the same time, Americans live for summer vacations… 81% have set aside money specifically for summer travel plans. And the vast majority of these trips will stay within the United States.

This is an opportunity to investment in amusement – the joys of summer – while at the same time collecting income.

Good investing,

Matt