Dividend-growth portfolio holding Hasbro (HAS) reported lackluster first-quarter results in April, but the shares have remained relatively strong since then. We think the unbelievable success of The Avengers could propel earnings in the second and third quarters and offer potential upside to consensus estimates. With the firm still trading below our fair value range and boasting a yield in excess of 4%, Hasbro looks very compelling at current levels. Even though the company hasn't been as quick as competitor Mattel (MAT) to embrace the digital world, the company has plenty of room to grow its dividend going forward. Its Valuentum Dividend Cushion is 1.6.
The Avengers has grossed $523.6 million in the U.S. in just four weeks, and it has grossed $1.31 billion worldwide thus far. We think the positive reception will drive sales of film-related toys to both collectors and children alike. Unlike traditional movies like Batman that may have a hero or two and a villain or two, The Avengers has a star studded cast of five super heroes, a master villain, and, of course, Samuel L Jackson. In our view, this will compound sales across the board; especially since you can't display a collection of iPad (AAPL) downloads. Further, it appears there won't be a corresponding video game, meaning that if kids want to play with Iron Man or Captain America, they'll have to do it via Hasbro.
Though Battleship looks to be a bit of a bust at the box office, we think the release of the movie has refreshed a stagnant product. This may stimulate sales, and it can only be a positive for the company.
Unfortunately, according to the LA Times, the 55% of the audience was over thirty years old, which suggests the Battleship brand may not click with younger customers. However, we do not think this will materially harm the film's ability to make toys or board games into movies in the future, since we place the blame for the film's failure on Universal Pictures (GE). Universal released the movie against The Avengers, a sure-fire blockbuster with the same target audience. It also released the film without a real star or even much awareness. The rumored Monopoly movie can still be a success and remains a valuable franchise. Hasbro remains a core position in the portfolio of our Dividend Growth Newsletter.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. HAS is included in the porfolio of our Dividend Growth Newsletter.