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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

Factor

What we want

Actual

Points

Dividend Reliability

Consecutive dividend's paid > 10 years

31 years

2

 

Free Cash flow payout ratio < 80%

53%

1

 

Debt to total capital < 75%

47%

1

 

Beta < 1.0

0.93

1

Dividend Growth

Consecutive dividend raises > 10 years

8 years

0

 

3 Year Avg dividend growth rate > inflation (3%)

17%

1

Fair Value

Current P/E < Avg 5 Year P/E

12 < 13.8

1

 

Current Yield > Avg 5 Year Yield

4.3% > 2.7%

1

    
 

Total Score

 

8/10

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.

Weaknesses - Hasbro relies on Wal-mart (NYSE:WMT), Target (NYSE:TGT), and Toys-r-Us for nearly 50% of its revenue.

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.

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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.

Source: Hasbro Dividend Income Analysis: Current Yield Presents A Buying Opportunity