The U.S. toy market is dominated by two companies: Hasbro, Inc. (NASDAQ:HAS) and Mattel, Inc. (NASDAQ:MAT). It’s extremely likely that you’ve come across one or more of the toys and games these two companies produce and market. Hasbro has a product portfolio that most consumers would easily recognize: games including Monopoly and Scrabble, and toy brands including Nerf and G.I. Joe. Meanwhile, Mattel’s stable of great brands includes Barbie, Hot Wheels, and the Fisher-Price and American Girl brands.
The toy industry in the United States is a bitter fight between these two rivals. When it comes to these two industry titans, investors have a tough choice to make: Hasbro or Mattel?
No clear leader in this toy story
Hasbro, Inc. (NASDAQ:HAS) and Mattel, Inc. (NASDAQ:MAT) are both off to great starts to 2013, rising 33% and 26%, respectively, just since the beginning of the year. Mattel, Inc. (NASDAQ:MAT) and Hasbro, Inc. (NASDAQ:HAS) are both highly profitable companies that superbly reward their shareholders with rising dividends over time.
Mattel has raised its dividend four years in a row, and the company’s first-quarter dividend represented a 16% increase over the prior dividend level. Furthermore, Mattel steadily buys back its own stock, providing further shareholder returns. Mattel bought back $9 million worth of its own shares during the first quarter of the year.
In the arena of shareholder returns, Hasbro, Inc. (NASDAQ:HAS) is no slouch either. The $6 billion company has also raised its dividend four years in a row, and has actually provided greater dividend increases than Mattel, Inc. (NASDAQ:MAT) lately. Hasbro last raised its dividend 11%, but its previous three dividend raises were each at least 20%.
And, like Mattel, Hasbro, Inc. (NASDAQ:HAS) also actively repurchases its own stock: the company bought back $20 million of its own shares during the first quarter, with $107 million remaining available in the current share repurchase authorization.
Few degrees of separation
When it comes to valuation, these two stocks share similar characteristics on that front as well. Mattel trades for 20 times trailing earnings, and Hasbro exchanges hands for 19 times earnings. Their dividend yields are similar too, as they both provide new investors with yields slightly above 3% at recent prices.
Their recent quarterly results are where prospective investors can begin to see some differences, although not drastically so. Mattel reported first-quarter revenues increased 9% year over year, whereas Hasbro was only able to realize 2% revenue growth as opposed to the first quarter of 2012.