SFZ from StartingFromZeroBlog.com asked a valid question about Hasbro that made me think about this investment. In short, he asked about Hasbro’s outlook versus a future riddled with smartphones, iPads, and other tech gadgets that kids are swarming towards. This really is a great question that deserves some research. And by research I mean quick internet searching. Hasbro’s first hit toy in the 1950’s was Mr. Potato Head. Find a picture of the first Mr. Potato Head and try to imagine wrapping one of those up and giving it to a kid for his birthday in 2014. He’d probably have nightmares after seeing the first Mr. PH. The original MPH bears a slight resemblance to Leatherface from Texas Chainsaw Massacre.
So how does Hasbro keeping selling Mr. Potato Head 60 years later? They adapt with the times. Check Amazon and see all of the different Mr. PH’s out there. They have Darth Vader, Iron Man and other variations of MPH. Just a plain MPH is currently the #77 selling toy on Amazon. How can it be after 60 years and advances in technology that a plastic MPH is the #77 selling toy? I really don’t have an answer for that one but the fact that this toy is still popular after all these years is nothing less than amazing.
Of course Hasbro can’t survive alone with the immortal Mr. Potato Head. They also have licensing with Disney which now owns Marvel and Star Wars lines. How long can Marvel, Star Wars, G.I. Joe, and Transformers be popular with kids and adults alike? Let’s just say a long time. In fact another Transformers movie is about to hit the theaters and will undoubtedly rake in gobs of money. Disney will be pushing new Star Wars movies soon and I’m sure Hasbro will have the toys to match.
Besides toys, Hasbro has a long list of board games that have been around for years and are still doing well. The #2 board game on Amazon is Connect Four. I was a little dumbfounded when I saw that. It is 2014, where you can pick up a tablet and effortlessly launch Angry Birds (licensed with Hasbro by the way) at mean, green pigs. Still, somewhere out there kids are playing a game where you drop checkers into a vertical rack until you get four in a row.
The more I look at Hasbro the more I’m amazed at what they’ve been able to pull off after all these years. They’re still tricking little kids into playing with plastic potatoes and frustrating adults with the Rubik’s Cube. People still even find it entertaining to spell words with a game called Scrabble.
Hasbro has really built a huge line of products that have found themselves in peoples’ homes for decades upon decades. You can check out the rest of Hasbro’s products at this link:
Hasbro Brand List
I don’t think I fully answered SFZ’s original question yet. We can’t expect board games and action figures to be popular forever. You’d think someday kids would tire of Play-Doh. But it looks like Hasbro isn’t resting on its laurels. I found an article talking about Hasbro’s interest in 3D printing. I find this intriguing and it really displays Hasbro’s desire to stay relevant. I’m picturing kids in the not too distant future outgrowing their Play-Doh set and designing their next creation with their Hasbro 3D toy printer. Should be interesting.
DISCLAIMER: I don’t work at Hasbro. I do own stock in HAS which should be obvious after reading this blog entry. I also have kids that like Hasbro stuff.
I’m down to 5 stocks in my search for long-term, LOYAL3 investments. It is getting really difficult to eliminate any of the remaining companies but I really want to focus on 2 companies for now and move up to 4 or so later. Eventually, I could invest in more companies but for now I’m keeping it narrowly focused. Out of the list of UL, HAS, MCD, TGT, and KO there is one clear winner in my mind based on dividend yield and historical growth. That would be MCD.
So I now have 1 of my top 2 LOYAL3 stocks picked. MCD stood out above the rest but selecting 1 more out of the remaining 4 isn’t as easy. To make it a little easier, I’m taking KO and TGT off of the list. While both have been solid over 20 and 30 year periods, their growth over the last 10 years is much lower than the other stocks on the list. Also, KO and TGT have the lowest dividend yield of the remaining 5 stocks.
This narrows the list down to MCD, HAS, and UL. Based on performance and my son’s intuition, I’m picking HAS over UL. Maybe someday he’ll be a millionaire by picking Hasbro’s stock as a kid.
So, there you have it. My current top 2 long-term picks on LOYAL3 are going to be McDonald’s and Hasbro.
Moving on with the LOYAL3 stock picks, I’m resorting to some help from a trusted financial expert. Well, not really a financial expert but an expert in toys. My current list of LOYAL3 stocks is down to 6 potential picks and 2 of those are toy/game companies. I want my final list to have a little diversification so either MAT or HAS has to go. Both companies seem to have respectable, dividend-paying stocks. I’m pulling in my son, an expert in toys/games, to help me make this difficult decision. Logo recognition is huge in the commercial world so I let my son pick which company he’d like to own by showing him a list of companies’ logos from LOYAL3’s website. He looked at the list thoughtfully and ultimately chose Hasbro over Mattel. Sorry Mattel, but you and your awesome 3.93% dividend yield have to go.
So, how did my son do with picking Hasbro? Is he a Warren Buffet in the making? Or has Hasbro’s marketing seeped into his brain better than Mattel’s? Let’s take a look at HAS:
– 7 stock splits since 1977
– Since 1977 they’ve paid dividends every year except 1980
– Current yield is just above 3%
– 10-yr growth of approximately 204%
– 20-yr growth of approximately 259%
– 30-yr growth of approximately 2425%
Overall, a very solid stock over the last 30 years.
My list now has 5 stocks left: UL, HAS, MCD, TGT, KO. Honestly, I could probably randomly pick any 2 of these remaining stocks and do well in the long-term.
Time to continue my quest of finding 2-4 reliable, stable, long-term, dividend paying stocks on LOYAL3 that I can periodically invest in over time. This round of cuts will not be based on numbers, performance, or any quantitative criteria. This time I’m going off of my gut feeling and following some of Warren Buffett’s advice. I heard Buffet say in an interview that in order for him to invest in a company it has to be understandable to him. There are two companies here that I know of but other than that I don’t feel comfortable selecting them as long-term investments. That said, I’m taking LB and AEO off the list. I might throw a little money into LB because it has impressive numbers but other than that I don’t intend to make continued, periodic buys of LB stock.
The stocks still on my LOYAL3 list are: MAT, UL, HAS, MCD, TGT, and KO. Not a bad lineup.
Previously I listed 13 stocks at LOYAL3 with 3% yields or higher. It is time to whittle down this list further. Because I’m currently looking for frequent dividend payments that I can reinvest, I’m removing from the list any stock that doesn’t pay dividends at least quarterly. That scratches BUD and NOK off of my list. That takes me down to 11 stocks. I’d still like to narrow it down to 2-4 stocks that I can invest in with small, monthly purchases. So let’s continue.
My next somewhat arbitrary criteria is to look at the stocks’ overall growth for at least the last decade. If any stock has a negative growth it is coming off of the list. I’ll go to the easy-to-use Google stock price chart to check this out. After some quick stock symbol searching, I’m able to scratch more stocks that either have a negative return over 10 years or 36 years (as far back as Google’s stock charts seem to go). Also, if the stock is less than 10 years old it is coming off my list. So here are the next stocks to be removed:
– FTR (less than 10 yrs old; this is fine because I know nothing about this company)
– WWE (negative 10 yr return; this is fine also because my gut feeling is to not invest in WWE)
– INTC (negative 10 yr return; too bad because I somewhat wanted this stock to be around after my little exercise here)
So, I now have 8 stocks left to research: LB, AEO, UL, HAS, MCD, TGT, KO and one wildcard with MAT. Google doesn’t show a 10-yr history for MAT but from what I can tell from other research this stock has been around for awhile so I won’t scratch it off just yet.
Some articles and interviews out there talk about it being difficult to beat the S&P 500 index. A solid recommendation for most casual investors is to stick with a mutual fund or ETF that mimics the S&P 500. I like that advice and have an ETF on my research list that follows the S&P’s returns but there are also some solid dividend-paying stocks out there that have beat the S&P over the last 30 years. Just by using a quick search on Google’s stock charts revealed several that I’m going to research further: CLX, MCD, KO, PG, and JNJ. I’m going to dig deeper into these but I was surprised by how well these stocks have done over the long-term. MCD was the most surprising of them all.