Cedar Fair, L.P. (NYSE:FUN)

CAPS Rating: 4 out of 5

The Company is a regional amusement park operator, which owns amusement parks, outdoor water parks, indoor water parks and hotels.


Player Avatar greedwhenfearful (89.71) Submitted: 12/16/2011 2:17:02 PM : Outperform Start Price: $18.37 FUN Score: +82.13

Not only is the geographic diversity here amazing, Cedar Fair has also been paying a dividend since 1988 that typically ranged from 6-13% depending on the earnings power that year. It was cut in 2010 but is now back with a massive 13% yield. Management expects to keep the dividend around 9%. Over a 30 year period, I’m betting FUN will increase 5 fold. If you want to see an investment absolutely kill the market and grow massive wealth, take a 6-13% yielder and reinvest those dividends for 30 years in a tax deferred account like a Roth IRA or ESA. That’s what I’m doing with Cedar Fair. Ever just make the minimum payment on a credit card and wonder why the balance always stays the same? Be on the other side of that card. I get the benefits of credit card like interest rates with the fun of learning and following the amusement park business.

Amusement parks have two huge “moats.” The first being their land and when they purchased it. Amusement parks typically start out on inexpensive, unwanted farm land. If the park succeeds, the land around it becomes very valuable. When Walt Disney just announced the development of Disney World in Florida, real-estate values practically tripled over night. The second is they are extremely immune to becoming obsolete from technological competition. It’s going to take Matrix-like, jack-the-brain in virtual reality technology to get the amusement park experience at home and make them obsolete. Kinnect Disneyland Adventures is incredible, but it’s still not preventing me from going to Disneyland next year. If anything, it’s making me want to go there more. Like an incredibly immersive commercial.

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