Content deals are also very important to Hasbro, Inc. (NASDAQ:HAS)’s success, with many of its core brands marketable on television or the big screen. That’s why Hasbro signed a multiyear deal in 2012 with Netflix, Inc. (NASDAQ:NFLX) to bring programming such as Transformers and G.I. Joe to family living rooms wherever Netflix operates. The deal is a win-win for both companies, as it greatly expands Hasbro’s audience on the factor of convenience alone, while giving Netflix, Inc. (NASDAQ:NFLX) broader appeal to families with a bigger library of kids programming.
Hasbro, Inc. (NASDAQ:HAS) has also been changing the way it markets to children. Although its most recent quarterly results showed a double-digit decline in sales of boys’ products, it was countered with a double-digit increase in sales to girls. Marketing to girls represents a large missed opportunity for Hasbro — and not just in the traditional sense of dolls like Mattel, with its line of Barbies. Earlier this year, Hasbro launched a line of Nerf Rebelle foam products, including a bow, specifically targeted at girls. It should be able to re-engineer much of its product line to better target both sexes.
Show me the money, Hasbro
But, when I look at Hasbro, I see much more than a great investment — I see dollar signs from its ongoing share buybacks and generous dividend!
In 2011, Hasbro added an additional $500 million to its share repurchase program. According to the company’s press release at the time, since it announced its original share buyback in 2005, it had repurchased $2.3 billion worth of shares. Whereas this money doesn’t go directly into shareholders’ pockets, it does help to reduce total shares outstanding and make the company appear cheaper on a P/E basis.
The big moneymaking potential here lies with Hasbro’s dividend growth. Although it had a dividend hiccup in 2001, Hasbro’s dividend has grown by an average of 29.6% per year since 2003. In other words, Hasbro’s dividend has jumped 1,233% per quarter in just a decade, as it’s taken advantage of content deals and broadened its audience appeal.
Source: Nasdaq.com.
*Assumes quarterly payout of $0.40 for remainder of 2013 and 2014.
Based on its projected payout of $1.60 for the year in dividends, Hasbro is divvying out only 50% of next year’s profits, a sustainable amount that could be subject to further double-digit dividend increases.
Foolish roundup
Sometimes the fun things in life do make for some of the best investment. Hasbro’s ability to reignite the passion for its core brands among today’s youth through content deals and broad-audience targeting is really beginning to pay benefits for shareholders. With the company growing its dividend by an average of nearly 30% per year over the past decade and currently yielding 3.4% — far and away better than a CD at your local bank — investors seeking dividend income need look no further than Hasbro for a great dividend idea.
The article 1 Great Dividend You Can Buy Right Now originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of, and recommends, Google, Hasbro, LeapFrog Enterprises, and Netflix. It also recommends Mattel.
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