Amusement parks such as Six Flags or Cedar Fair, which you may know as Dorney Park or Kings Dominion or WildWater kingdom, are the ideal family vacation destinations, and these two operators keep them fresh with new rides fairly regularly, taking advantage of the wonders of technology. Those new features keep people coming back over and over again, year after year.
While we focus intensely on how Disney's (DIS) theme parks do, how much Disney is charging and how big the gate is, the moves these smaller companies make mean absolutely nothing to most investors out there.
I have been a big fan of these stocks ever since the Great Recession, in part because these companies are so committed to their shareholders. They spew cash, and they return as much as prudently possible to those who own them. I think that's a chief reason why Cedar Fair has gone from $7 five years ago to $50 now, and yet even after that remarkable move, it still yields 5.3%. Six Flags is no slouch either, yielding 4.4% after a terrific run.
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Six Flags is the largest regional theme park operator on earth, with 19 theme parks, water parks and zoological parks across the country. Cedar Fair is a close second with 11 amusement parks, seven water parks and five hotels.
These companies raise their dividends pretty much each time they open new rides. They have little competition, because it's so difficult for any new operator to cobble together the real estate needed and get the insurance that's necessary to open a new park.
I always preach diversification. I never want you in all cloud stocks, or all oils, or all biotechs. That's just too risky. Stocks such as Cedar Fair and Six Flags aren't roller coasters. Best of all, they leave the thrills and the excitement to their parks, not to your portfolio.
Random musings: Thanks to my colleague Matt Horween for first bringing Cedar Fair to my attention as a terrific company. Great call!
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, held no positions in any of the stocks mentioned.