In the spirit of the holiday season, here’s a list of the major dividend stocks that market fun products to children and families.
Hasbro gets the first mention on this list due to its dividend growth and overall quality. The company is more than just a toymaker; it’s a character and brand company. Hasbro owns several memorable and well-known characters and brands, including Transformers and G.I. Joe. The company also owns both Milton Bradley and Parker Brothers games (Monopoly, Scrabble, Risk, Trivial Pursuit, Battleship, Twister, etc.), Nerf, Wizards of the Coast, Plah-Doh, My Little Pony, and much more. Hasbro has got a lot going for it, although its debt load is a bit higher than I’d like to see. Hasbro has been effectively using movies and electronic media to keep its products relevant. The cycle of toys selling movies and movies selling more toys is an enviable position.
Brand names provide a solid economic moat. The top board games are known in many places around the world, and their content can be licensed to electronic media companies in addition to being sold as physical games. GI Joe and particularly Transformers have brought millions of people to the movies. Wizards of the Coast produces products like Dungeons and Dragons, Magic the Gathering, and other role playing and trading card games.
Dividend Yield: 2.08%
Latest Dividend Increase: 25%
Market Capitalization: $6.6 billion
The Walt Disney Company (DIS)
Disney is the ultimate character company. Spanning the better part of a century, Disney has been in the business of spreading happiness to children while accumulating considerable criticism along the way. The company owns several characters that have been well-received for generations, and also operates theme parks, television stations, and now owns Marvel as part of a large media conglomerate. Disney is a go-to company for all forms of child and family entertainment, and their licensed toy products usually sell for a premium over those of competitors. Companies such as Mattel make deals with Disney to produce toys based on their imaginative characters and stories.
The 1990’s were termed the “Disney Renaissance”, where the company produced a multitude of extremely popular films that remain very well-known today. Some of the major ones from this time period include Lion King, Aladdin, Beauty and the Beast, and Mulan. A few years ago, Disney acquired Pixar, a highly successful computer-animated film studio. More recently, Disney returned to making traditionally animated movies with the Princess and the Frog, a well-received and profitable major animated film. Currently, Tangled is in theaters, which remarkably is the most expensive animated movie ever made and one of the most expensive of any types of movies ever made. In other words, Disney’s continued ability to produce high quality family films is clear.
Dividend Yield: 1.08%
Latest Dividend Increase: 14%
Market Capitalization: $70 billion
Mattel is larger than Hasbro and has a higher dividend yield and lower debt ratios. The company sells toys for boys and girls of various ages and owns the Barbie franchise , Hotwheels and Matchbox cars, Fisher-Price, Uno, and more. The company also licenses several Disney products. Mattel games like Uno and Apples To Apples can be great and inexpensive entertainment for families or friends. The downside for this company is the irregular dividend growth and their lackluster financial performance during the recession.
Unlike Hasbro, Mattel hasn’t experienced growth in the last few years. The company stock, however, trades at a considerable discount to Hasbro stock despite the company’s stronger balance sheet and higher dividend yield.
Dividend Yield: 3.28%
Latest Dividend Increase: 11%
Market Capitalization: $9 billion
Full Disclosure: As of this writing, I have no position in any of the companies mentioned.
You can see my full list of individual holdings here.