A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. In the past 10 years Cedar Fair LP (NYSE:FUN) has returned an average of 6.00% per year to investors in the form of dividend payouts. Let’s dig deeper into whether Cedar Fair should have a place in your portfolio. View out our latest analysis for Cedar Fair
5 checks you should use to assess a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is it paying an annual yield above 75% of dividend payers?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has dividend per share amount increased over the past?
Is its earnings sufficient to payout dividend at the current rate?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does Cedar Fair fare?
Cedar Fair has a trailing twelve-month payout ratio of 99.47%, which means that the dividend is not well-covered by its earnings. Going forward, analysts expect FUN’s payout to remain around the same level at 95.48% of its earnings, which leads to a dividend yield of 5.78%. Moreover, EPS should increase to $3.63.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
In terms of its peers, Cedar Fair produces a yield of 5.56%, which is high for Hospitality stocks.
Whilst there are few things you may like about Cedar Fair from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three pertinent factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for FUN’s future growth? Take a look at our free research report of analyst consensus for FUN’s outlook.
Valuation: What is FUN worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether FUN is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.