Hasbro, Inc. (HAS), Mattel, Inc. (MAT): Toying Around With Toy Stocks

However, this recent rally in no way signifies that the stocks are destined to come down. Similarly, a recent selling-off doesn’t mean that the stock is set to go up, as is the case with both Hasbro and Mattel, Inc. (NASDAQ:MAT)’s peer, JAKKS Pacific, Inc. (NASDAQ:JAKK) which is down 16% since the start of the year (YTD).

JAKKS is expected to announce its quarterly results on April 25. The company is expected to post a loss per share of $0.84 and revenue of $71.2 million. It is interesting to note that despite making a loss, the stock pays a dividend yield of 2.68%. Now, we’ll have to see for how long the company can sustain its dividend. On this point, I will like to discuss the dividend yields across all three companies.

It is interesting to note that Hasbro, Inc. (NASDAQ:HAS)’s historical precedent shows that it has not broken through a 4% dividend ($1.60 payout and $40 price target) despite challenged fundamentals. Similarly, Mattel, Inc. (NASDAQ:MAT) has also adamantly sustained its dividend payouts. This will help both these companies to sustain their stock prices (after the recent rally) given the market’s appreciation for dividend stocks.

However, JAKKS Pacific, Inc. (NASDAQ:JAKK) is new to dividends and we can’t say anything about its dividend sustainability. Seeing that the company is still a loss-making one, it is hard to believe that the company will be able to sustain its dividend, and therefore, an EPS/sales miss in the ongoing season might lead to further deterioration in the stock price.

The Foolish bottom line

Despite some negative sentiment around both Hasbro, Inc. (NASDAQ:HAS) and Mattel, Inc. (NASDAQ:MAT), I do not consider them as sells given that their strong dividend yields will help them to retain their recent rallies. However, JAKKS is currently recommended as a sell given its doubtful outlook on both revenue (given industry wide weakness) and dividend sustainability.

The article Toying Around With Toy Stocks originally appeared on Fool.com and is written by Masam Abbas.

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