Hasbro (NASDAQ:HAS) Has Re-Affirmed Its Dividend Of US$0.68

By
Simply Wall St
Published
January 21, 2022
NasdaqGS:HAS
Source: Shutterstock

The board of Hasbro, Inc. (NASDAQ:HAS) has announced that it will pay a dividend of US$0.68 per share on the 15th of February. This means the dividend yield will be fairly typical at 2.8%.

View our latest analysis for Hasbro

Hasbro's Payment Has Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Prior to this announcement, Hasbro's dividend made up quite a large proportion of earnings but only 36% of free cash flows. This leaves plenty of cash for reinvestment into the business.

The next year is set to see EPS grow by 42.1%. Assuming the dividend continues along the course it has been charting recently, our estimates show the payout ratio being 63% which brings it into quite a comfortable range.

historic-dividend
NasdaqGS:HAS Historic Dividend January 21st 2022

Hasbro Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The first annual payment during the last 10 years was US$1.20 in 2012, and the most recent fiscal year payment was US$2.72. This works out to be a compound annual growth rate (CAGR) of approximately 8.5% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

Dividend Growth May Be Hard To Come By

Investors could be attracted to the stock based on the quality of its payment history. Unfortunately things aren't as good as they seem. Over the past five years, it looks as though Hasbro's EPS has declined at around 5.1% a year. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth. Earnings are predicted to grow over the next year, but we would remain cautious until a track record of earnings growth is established.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Hasbro's payments, as there could be some issues with sustaining them into the future. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. We would be a touch cautious of relying on this stock primarily for the dividend income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 2 warning signs for Hasbro that investors need to be conscious of moving forward. We have also put together a list of global stocks with a solid dividend.

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