Company Description: Hasbro Inc. (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. (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 (EA), Activision (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.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.