Dividend stocks are everywhere, but many just downright stink. In some cases, the business model is in serious jeopardy, or the dividend itself isn’t sustainable. In others, the dividend is so low, it’s not even worth the paper your dividend check is printed on. A solid dividend strikes the right balance of growth, value, and sustainability.
Today, and one day each week for the rest of the year, we’re going to look at one dividend-paying company that you can put in your portfolio for the long term without too much concern. This isn’t to say that these stocks don’t share the same macro risks that other companies have, but they are a step above your common grade of dividend stock. Check out last week’s selection.
This week, we’ll take a close look at Hasbro, Inc. (NASDAQ:HAS) and I’ll remind everyone that investing, while serious, can have its fun moments.
Do not pass go. Do not collect $200.
To put it mildly, there’s been little clowning around in the toy and game sector of late. Perhaps the only thing we can count on more than disagreements in Congress is that children as a whole will see their interests change in a heartbeat multiple times over the next couple of years. What this means for toy companies is that they need to constantly be on the front end of the innovative scale and can’t languish over failed ideas for too long — because there will be many failed ideas.
JAKKS Pacific, Inc. (NASDAQ:JAKK) shares, for instance, were massacred last week after it lowered its full-year sales guidance by more than 10%, revised its full-year forecast from a modest profit to a hefty loss, and suspended its quarterly dividend indefinitely. Without its Pokemon licensing, JAKKS Pacific, Inc. (NASDAQ:JAKK) is struggling to find new sources of revenue growth.
The story was very similar for Mattel, Inc. (NASDAQ:MAT) whose core brands, which have survived decades of changing interest by children, are beginning to lose their luster. Specifically, Mattel, Inc. (NASDAQ:MAT) reported the fourth straight sales decline for its iconic Barbie brand. Overall sales for the second-quarter trudged higher by less than 1% — no thanks to a 2% drop in North American sales — while profit actually fell by 24%.
But the sector struggles aren’t confined to what you might refer to as stale gaming brands. LeapFrog Enterprises, Inc. (NYSE:LF), a maker of educational tablets for children, has seen its share price move lower or head sideways for much of the past year as a combination of lofty shareholder expectations, and the potential for competition from the likes of Toys R Us or Google Inc (NASDAQ:GOOG) remains a constant threat. It also doesn’t help that LeapFrog has historically been a very cyclical company. Until LeapFrog Enterprises, Inc. (NYSE:LF) and the toy sector as a whole break those cyclical ties, they may struggle to excel throughout the year.
Source: Philip Taylor, Flickr.
Get out of jail free!
However, not all toy and game makers have such a bleak outlook in the short term. Hasbro, Inc. (NASDAQ:HAS), maker of Monopoly, Transformers, and other brand-name iconic toys, is using strategies that could help put it at the top of the toy pile among its peers.
To begin with, partnerships are a key component to Hasbro, Inc. (NASDAQ:HAS)’s ongoing success. In 2009, Hasbro entered into a deal with media company Discovery Communications Inc. (NASDAQ:DISCA) to create a channel known as the Hub, which would feature programming based on Hasbro’s owned toy lines. Since 2010, when the channel made its debut, sales of My Little Pony have taken off. In the wake of its renewed success, the franchise released a new movie in June, which will go onto DVD later this summer.