Hasbro‘s (Nasdaq: HAS) dividend history spans decades. However, it isn’t a dividend aristocrat. It hasn’t paid 25+ years of consecutive larger dividends. Still, the company might be worth investing in. Let’s check out the business, dividend history, and safety.
Business Overview and Highlights
Hasbro is a $12 billion business. The company is based out of Pawtucket, Rhode Island and it employs 5,400 thousand people. Last year, Hasbro pulled in $5.2 billion in sales, which breaks down to $965,000 per employee.
The company runs within the consumer sector and maintains a solid credit rating (BBB) from the S&P. This allows Hasbro to issue cheap debt to grow the business and pay dividends.
In 2017, Hasbro made a takeover offer for Mattel. At that time, investors valued Mattel at around $5 billion… but the deal didn’t go through. Hasbro is looking to expand both organically and through acquisition. Future expansion should help to support the dividend payouts.
Hasbro Dividend History 10-Years
The company paid investors $0.80 per share a decade ago. Over the last 10 years, the dividend has climbed to $2.28. That’s a 185% increase! You can see the annual changes below.
The compound annual growth is 11% over 10 years… but over the last year, the dividend climbed 11.8%. The increase in dividend growth is a good sign. Hasbro might work out as a great income investment. Let’s check out the yield.
Hasbro Current Yield vs. 10-Year Average
Hasbro has a long history of paying dividends. It’s one of the top dividend stocks around. This also makes the dividend yield a great indicator of value. A higher yield is generally better for buyers. Sustainability is also vital, and we’ll look at that soon.
The dividend yield comes in at 2.56%, which is below the 10-year average of 3.36%. The chart below shows the dividend yield over the last 10 years.
The lower yield shows that investors have bid up the company’s market value. They might be expecting higher growth and payouts. But more often than not, the dividend yield is mean-reverting with share price changes.
Improved Dividend Safety Check
Many investors look at the payout ratio to determine dividend safety. To do this, they look at the dividend per share divided by the net income per share. So a payout ratio of 60% would mean that for every $1 Hasbro earns, it pays investors $0.60.
Payout ratio is a good indicator of dividend safety… but accountants manipulate net income. They adjust for goodwill and other non-cash items. A better metric is free cash flow.
Here’s Hasbro’s payout ratio based on free cash flow over the last 10 years.
The ratio is volatile over the last 10 years, and the trend is down. The last reported year shows a payout ratio of 48.4%. This gives wiggle room for Hasbro’s board of directors to raise the dividend.
Closing Thoughts on Hasbro Dividend History
Hasbro’s dividend history is a great indicator of value. However, the dividend yield is near its 10-year low. It might not be a great time to invest. The payout ratio has climbed over the last 10 years, and if the trend continues, dividend growth might slow down or even reverse course.
If you’re interested in seeing more, please comment below. You can also check out our dividend reinvestment calculator.
Good investing,
Rob
