Company Description: Hasbro Inc. (NASDAQ:HAS) is a branded play company providing children and families around the world with a wide-range of entertainment offerings based on the Company's world class brand portfolio. Hasbro provides its global customer base with well-known brands such as Transformers, Littlest Pet Shop, NERF, Playskool, My Little Pony, G.I. Joe, Magic: The Gathering and Monopoly. Hasbro is part of the Consumer Goods sector and Toys & Games Industry.
Dividend Reliability A stock's dividend safety and reliability is determined by its dividend payment history, its current financial health, and its volatility in relation to the market as a whole. A total of 5 points available.
- The number of Consecutive Dividend Payments -10 to 25 Years = 1 Point; More than 25 Years = 2 Points
- Free Cash Flow Payout Ratio - Less than 80% = 1 Point
- Debt to Total Capital - Less than 75 % = 1 Point
- Beta < 1.0
Dividend Growth Although growth isn't as important when we are buying for current income, we still want a history of increases as well as demonstrated ability to keep up with inflation. A total of 3 points available.
- Number of Consecutive Dividend Increases - 10 to 25 Years = 1 Point; More than 25 Years = 2 Points
- 3 year avg dividend growth rate > Inflation (3%) = 1 Point
Fair Value If we're going to buy a stock, we don't want to purchase it when its overvalued. We will evaluate an income stock's valuation by its P/E and Yield. Total of 2 points available.
- Current P/E < avg 5 Year P/E = 1 Point
- Current Yield > avg 5 Year Yield = 1 Point
What we want
Consecutive dividend's paid > 10 years
Free Cash flow payout ratio < 80%
Debt to total capital < 75%
Beta < 1.0
Consecutive dividend raises > 10 years
3 Year Avg dividend growth rate > inflation (3%)
Current P/E < Avg 5 Year P/E
12 < 13.8
Current Yield > Avg 5 Year Yield
4.3% > 2.7%
Strengths - Hasbro is one of the largest toy companies in the world and has a large brand portfolio of well known products. It has high product diversity and strong distribution network that is rivaled by few in its industry.
Opportunities - Continued licensing of its current products for movie and TV shows. Global expansion. Advances in affordable technological and digital entertainment.
Threats - Hasbro is second to Mattel, Inc. (NASDAQ:MAT) in market share. It operates in a seasonal industry that is also highly regulated. It is susceptible to macro-economic changes, particularly in North America.
Conclusion - Hasbro scored 5 points in dividend reliability, 1 point in dividend growth, and 2 points in fair value for a final score of 8/10 points which rates it as a Strong Dividend Income Stock.
Hasbro has done an excellent job positioning itself to be a leader in the digital and entertainment segment. It has partnered with companies like Electronic Arts (NASDAQ:EA), Activision (NASDAQ:ATVI) and The Hub. It also dominates in the movie licensing business with licenses for Star Wars & Marvel and owns the rights to Transformers and GI Joe. With its current yield above 4%, low FCF payout ratio and debt to total capital, Hasbro looks like a great addition to a dividend income portfolio. I am also considering Hasbro for my dividend growth portfolio and believe it could be an excellent addition to my son's DRIP portfolio.
Disclaimer: This analysis is intended to give investors a general overview of a stock's dividend income highlights that I feel are important. The analysis can be used to help determine whether further, deeper examination should be done. As always, investors should do their due diligence before buying a stock.