Mattel (MAT)

[Dividend Watcher]

As you may know, MAT took a nice 12% drop today (and 20% for the month) due to disappointing earnings. Who would have thought that Barbie () wasn't selling?

HAS is down 10% for the month but analyst expectations are still pretty good. HAS seems to be focusing more on movies, licensing and electronic games while my first impression is that MAT is more focused on their existing products (toys) and board games.

I'm having a hard time wrapping my head around where the toy/doll/board game market is going 5-10 years from now.

What are your thoughts on where these companies' business models are going and do you think MAT is a long-term buy here?

[fiveoh]

Everything is going electronic. I don't think toy/doll/boards games are going away but it's definitely a declining business. I see so many kids walking around with ipads nowdays. My wife teaches Pre-K and they have 4 ipads to use in the classroom... I looked at HAS a few times but this scared me away.

[Kerim]

I've never run either MAT or HAS through my screens to see how they score alongside other dividend growth stocks. I think my reason for this is the same as fiveoh -- I just don't see a moat around those businesses and don't think they're in a strong position over the long haul. In addition to the movement to electronic gadgets, there are also a ton of small niche toy companies springing up and able to outmaneuver the big guys. I suppose that MAT and HAS can always just buy those smaller companies whenever they gain traction, but for some reason I have little confidence in their long-term prospects.

[Dividend Watcher]

You may be right.

The thing that has me befuddled is that both boards have increased dividends in the double digit percentages for a while. Even with this lousy earnings report, MAT increased their dividend 5% in the same announcement. You'd think if the boards were in "hunker down" mode, they wouldn't be so generous.

I skimmed MAT's earnings report and there are a lot of non-cash adjustments for old IP lawsuits. It really got me confused at first glance and want to look at that further.

Interestingly, in the same earnings report, they advised that all their dividends for 2013 were not considered "qualified" dividends but to be considered as return of capital. Another interesting tidbit I've never seen before. Couldn't find the reason why yet but now I need to satisfy my own curiosity.

[Dexter]

(02-02-2014, 06:34 PM)Dividend Watcher Wrote: You may be right.

The thing that has me befuddled is that both boards have increased dividends in the double digit percentages for a while. Even with this lousy earnings report, MAT increased their dividend 5% in the same announcement. You'd think if the boards were in "hunker down" mode, they wouldn't be so generous.

I skimmed MAT's earnings report and there are a lot of non-cash adjustments for old IP lawsuits. It really got me confused at first glance and want to look at that further.

Interestingly, in the same earnings report, they advised that all their dividends for 2013 were not considered "qualified" dividends but to be considered as return of capital. Another interesting tidbit I've never seen before. Couldn't find the reason why yet but now I need to satisfy my own curiosity.

Interesting thanks.

I do not like ROC at all as it is bad over the long term. I'm sure you know this already but ROC reduces your cost basis, and I suppose over a very long period of time, once that cost basis hits zero, then all ROC is taxable at ordinary income tax rates.

ROC is a pretty common thing for most REITS and several CEFs, but not so much with common stocks.

I wonder if MAT has always paid ROC in the past? I couldn't find any info on this. They say they expect future "dividends" to consist of over 50% ROC.