SeaWorld Launches Ambitious Dividend Yield After IPO, Sort Of

Retail

Published: June 12, 2013 4:25 pm

Last Updated: June 13, 2013 6:14 am

SeaWorld Entertainment Inc. (NYSE: SEAS) is still a fairly new public company since it launched its IPO just in April. Shares are handily higher as well, and now shareholders are getting another boost from the company’s corporate governance plan under management. The theme park owner and operator plans to commence a dividend payment of $0.20 per share per quarter to shareholders. The dividend yield of almost 2.2% sounds very aggressive on the surface for new companies that just came public compared to the index dividends. It might not sound that aggressive yet if you compare the payout to other large venue theme parks.

While a 2.2% dividend yield might not sound like a very high dividend for those who chase the high dividend yields in riskier sectors, that is still a higher yield than 8 of the 30 Dow Jones Industrial Average components pay right now. IndexArb.com represents that the aggregate S&P 500 dividend yield is 2.26% and that the aggregate DJIA yield is 2.66%. All of a sudden a 2.18% dividend sounds rather ambitious considering that the company is a new IPO. You have to remember that management of public companies often sets their dividend payments up to where it is sustainable in future weak business cycles and to where a dividend can be grown in normal cycles.

Where this dividend will not sound great is when you compare the yield to the 6% or so paid by Cedar Fair L.P. (NYSE: FUN). That dividend was raised in 2013 by more than 50%. Six Flags Entertainment Corp. (NYSE: SIX) yields 4.7%. The common stock dividend is payable on July 1, 2013 to stockholders of record at the close of business on June 20, 2013.

SeaWorld shares closed down 1.1% at $36.61 and its post-IPO trading range is $30.26 to $39.65. The current consensus SeaWorld share price target is $41.13.

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