The ongoing battle between Hasbro, Inc. (NASDAQ:HAS) and Mattel, Inc. (NASDAQ:MAT) gets more complex with every passing year due to new, fierce competition from virtual game competitors. As a result, both Hasbro, Inc. (NASDAQ:HAS) and Mattel, Inc. (NASDAQ:MAT) are eagerly searching for new growth avenues.
One such opportunity exists in international market growth potential but as is usually the case, success in new markets is never guaranteed. In this arena, one of the toy-maker giants is solidly outperforming its rival, and as such, deserves first priority from investors.
Cash returns to shareholders a key piece of the puzzle
Mattel, Inc. (NASDAQ:MAT) and Hasbro, Inc. (NASDAQ:HAS) have rewarded their shareholders handsomely through strong dividends. Mattel, Inc. (NASDAQ:MAT) raised its dividend earlier this year by 16%,while Hasbro, Inc. (NASDAQ:HAS) bumped up its own payout by 11% this year. Each stock carries a market-beating dividend that is surely a contributing factor behind their popularity with individual investors. While the broader S&P 500 index provides a yield of roughly 2%, Mattel, Inc. (NASDAQ:MAT) and Hasbro, Inc. (NASDAQ:HAS) both yield approximately 3.4% at recent prices.
This is one area which separates Mattel, Inc. (NASDAQ:MAT) and Hasbro, Inc. (NASDAQ:HAS) from the competition. Much smaller industry player JAKKS Pacific, Inc. (NASDAQ:JAKK) has only paid a dividend for two years, but there are already red flags that investors should be aware of. The company slashed its payout by 30% earlier this year as its underlying business has deteriorated. JAKKS Pacific, Inc. (NASDAQ:JAKK)’s revenue is down 16% through the first half of the year, and its costs have risen at the same time.
Not surprisingly, then, is that it has posted a $68 million loss over the first six months of the year, more than triple the loss recorded during the same period last year. Put simply, JAKKS Pacific’s profits and dividends are going in the wrong direction, and investors should view these are serious causes for concern.
Emerging market growth is the key differentiator
It’s a well-known fact within the toy industry that North America is a saturated market, where toy sales are flat-lining. The rapid rise in popularity of mobile gaming has taken traditional toy makers by surprise. They are struggling to adapt.
The major toy makers, Mattel and Hasbro, naturally have turned their attention toward the emerging markets, where under-developed economies present stronger growth potential. However, on this front, there’s a stark difference in performance between the two U.S. giants.