Advanced stock market trading software encourages individuals to trade by making the process more user-friendly. Traders have different objectives. Some look for short-term gains and others invest for the long term. But most traders look for income, and that’s where dividend stocks become so attractive.
There is a high-yield dividend stock that Motley Fool analyst Joe Tenebruso is really attracted to. The business offers a massive 7.4% yield with significant prospects for further dividend increases.
Revenue and EBITDA All on the Ascendancy
The stock we’re talking about is the amusement park company Cedar Fair ($FUN). The figures that stand out are that the master limited partnership (MLP) business generated revenue worth $1.35 billion and adjusted earnings worth $468 million before the deduction for taxes, interest, amortization and depreciation (EBITDA), from the 15.9 million visitors in 2018.
Tenebruso reckons Cedar Fair could pass the profits to investors in a manner that is tax-advantageous. Unit holders were paid $203 million of cash distributions in 2018. As of now, the MLP’s units have a 7.4% yield.
A Great Q2 for Cedar Fair
Nasdaq quotes Cedar Fair’s Q2 2019 figures from the company’s press release:
In 2019’s second quarter, Cedar Fair had 64 more operating days as a result of the shift in the fiscal calendar of the company. That obviously affected the company’s results positively. Revenue had a year over year rise of 15% to $436 million. Contributors to these gains were the 10% rise in the number of operating days, greater attendance, the per-capita spending in-park and the revenue out-of-park. In the 2nd quarter, the company’s per-capita in-park spending amounted to $47.22, which is a $1.82 rise from the year-ago period. The revenue out-of-part was in the region of $49 million.
There was a 3% net revenue increase in Cedar Fair on the basis of comparable operating calendar. This was the result of the 4% rise in the above-mentioned per-capita in-park spending as well as the out-of-park revenue. And Cedar Fair is continuing to invest in more engaging and “immersive attractions” that will keep visitor interest high, according to CEO Richard Zimmerman.
Cash Payout Likely to Grow as New Income Opportunities Come Up
Tenebruso believes the partnership’s cash payout could keep growing. There are new entertainment options and rides the company is investing in. Cedar Fair is also following the strategy of developing the land next to its parks, to give it some revenue apart from the park rides and visitors. Cedar Fair also acquired two Schlitterbahn water theme parks in Texas, and these extremely popular and award-winning parks attracted 1.2 million visitors in 2018, generating revenue worth $68 million. That raises the MLP’s cash earning possibilities while enlarging its asset portfolio. As a result, the management is of the expectation that these investments could power an annual growth in the cash it distributes to investors, by 4%.
Management Expects Significant Growth in Adjusted EBITDA
The management’s expectation is for adjusted EBITDA to rise to $575 million as 2023 comes along, from the 2018 figure of $468 million. If Cedar Fair is able to grow its free cash flow in a manner that reflects this projected adjusted EBITDA growth, Tenebruso calculates that it should rise to around $100 million during this period. By 2023, that could put the annual free cash flow of Cedar Fair at around $260 million, enough to cover the company’s dividend payments.
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