No Playing with this Dividend Stock - Mattel (MAT)

There are few more recognizable consumer brands than Hot Wheels, Barbie and Toy Story, and investors who got a kick out of playing with them when they were younger may well consider an investment in the brand owner as they get older.

Established in 1945, Mattel (MAT) owns many of the world’s most popular toy brands and is represented in the United States, Asia, Europe and South America.

The company offers investors an attractive dividend yield of around 3.4% and trades on an undemanding price to earnings multiple of around 12 times historical earnings.

Mattel had an encouraging first quarter to 2010 with worldwide net sales up 12% and operating income of $45.2 million compared to operating loss of $55.2 million in the first quarter of 2009. Earnings per share came in at $0.07 versus the prior year loss per share of $0.14. Worldwide toy demand is expected to recover along with global economy.

It should be noted however that Mattel (MAT) is a seasonal business benefitting more around the holidays and festive seasons and traditionally seeing slower earnings in the first quarter of the new financial year. On a year-on-year basis the company reported 2009 earnings 39% higher than in 2008.

In terms of the dividend management at Mattel (MAT) has indicated that this is an important issue for the company. Since 2002 the company has been focusing on upping its annual return to shareholders. In 2002 shareholders were taking home $0.05, and in 2009 this had risen to $0.75. That’s a 45% compound annual growth rate!

"The Mattel (MAT) Board of Directors continues to demonstrate its commitment to returning excess funds to stockholders," said the company in announcing the latest dividend in December 2009. The company pays out annually.

For those investors who have a preference for investing in companies with a high level of corporate social responsibility, Mattel (MAT) scores highly here. It was once again voted as on of the "World's Most Ethical Companies" in 2010 by the Ethisphere Institute.

One thing is clear: many of us have enjoyed investing many hours in Mattel (MAT) products when we were younger and it may well pay off to invest in the company again now that we are older!