Six Flags rewards shareholders with excess cash
Should I invest in Six Flags? A look at 4Q14 and FY14 operating performance (Part 8 of 10)
Cash dividends
A fundamental business goal of Six Flags Entertainment (SIX) is to generate superior returns for its shareholders over the long term. As a part of its strategy to achieve this goal, Six Flags has paid quarterly cash dividends since the fourth quarter of 2010. In 2014, Six Flags paid $184 million in dividends, or $1.93 per share, a 6% increase over 2013.
On October 21, 2014, Six Flags’ board of directors approved an increase in its ongoing quarterly cash dividend from $0.47 per share of common stock to $0.52 per share of common stock for the fourth quarter of 2014.
Share buyback
On November 20, 2013, Six Flags’ board of directors approved a new stock repurchase program that permits it to repurchase up to $500 million in shares of its common stock over a four-year period.
As of December 31, 2014, Six Flags repurchased 5,314,000 shares under the program, at a cumulative ~$200.9 million at an average price per share of $37.81. This leaves the company with ~$299.1 million available under the current share repurchase authorization. The company also repurchased ~$195 million of its stock in 2014 at an average price of $37.86.
In August 2014, SeaWorld Entertainment’s (SEAS) board of directors authorized a share repurchase program of up to $250 million of its common stock beginning January 1, 2015.
Investors who want to invest in leisure companies may invest in ETFs such as the Consumer Discretionary Select Sector SPDR Fund (XLY). XLY has the highest exposure of ~7% in The Walt Disney Company (DIS).
Key takeaways from 4Q14 earnings call
James W.P. Reid-Anderson, chairman, president, and CEO (chief executive officer) of Six Flags, said, “We will continue to use excess cash flow to reward our shareholders with a stable and increasing cash dividend and use the balance to purchase shares. . . . Our stock price is up six-fold and we have returned more than $1.5 billion to our shareholders through cash dividends and share repurchases, all while maintaining a very healthy balance sheet. At almost 5%, our dividend yield is more than double the S&P 500 and one of the most attractive yields in the market. In addition, our cash EPS CAGR has almost trebled the S&P 500 over the last five years, putting us in an elite category of companies driving both yield and growth.”
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