Hasbro, Inc. (HAS) is one of the world’s largest toy manufacturers. Hasbro has many great brands including Parker Brothers, Playskool, G.I. Joe, Transformers, Nerf, Tonka, Milton Bradley and My Little Pony. I can remember playing with many of these Hasbro toys when I was growing up and I imagine kids will continue playing with Hasbro toys for many years to come. Hasbro is a global company with about 50% of sales coming internationally. Along with the brands already mentioned, Hasbro also markets and sells toys in the Marvel comic book product line. With the recent popularity of movies such as the Avengers and Iron Man, this has been a very profitable line for the company recently.
Hasbro has been rewarding investors with 10 years worth of dividend growth. Earlier this week I watched the movie Battleshipbased loosely after the popular board game. The movie and the fact that Hasbro is one of my top 35 dividend growth stocks, got me interested to see how an investor would have fared owning Hasbro shares over the past 10 and 20 years.
A 10 Year Investment in Hasbro
Let’s take a look and see how you would have fared if you invested $5,000 in Hasbro stock exactly 10 years ago. On July 25, 2003 you would have been able to purchase roughly 261 shares of Hasbro for $4,995.54 at a closing price of $19.14. There were no stock splits to take into account since then. The most recent closing price of HAS was July 26, 2013 when HAS closed at $47.08. Today your 261 shares would be worth roughly $12,287.88 for a return of 146% or a compound annual growth rate of 9.42%.
Market returns have been pretty good for Hasbro investors over the last decade, but lets not forget about the dividends you would have received during those 10 years as well. Over the course of the past 10 years you would have received a total of $1,913.13 in dividend income. This means that your total return over the past decade of owning Hasbro stock has been 184% or 11.01% compounded annually. I don’t know about you but I would be pretty satisfied earning an 11.01% annually compounded return during a time many called the lost decade of investing.
So over the past decade while owning Hasbro shares you have enjoyed a 11.01% compounded annual return. You have been paid in cash dividends $1,913.13. You could have used that dividend income to pay some bills, travel, attend sporting events, donate to charity or anything else you’d like. Or you could have reinvested those dividend payments and your total return would have been even better.
A 20 Year Investment in Hasbro
A 10 year investment in Hasbro was pretty solid for shareholders. How about a 20 years investment? Lets take a look at how you would have fared had you invested roughly $5,000 in Hasbro stock 20 years ago. On July 26, 1993, HAS stock closed with a price of $35.64. You would have been able to buy 140 shares for a total price of $4,989.60. Since that date there were two 3 for 2 stock splits. Today you would have a total of 315 shares worth a total value of $14,830.20. This would give you a return of 197% or 5.60% compounded annually.
Once again don’t forget about all the dividend income you would have received over the past 20 years by just owning your Hasbro shares. Over the past 20 years you would have received a total of $2,835.60 in dividend income from Hasbro. This means that your total return over the past 2 decades of owning HAS stock has been 254.06% or 6.53% compounded annually.
So a 20 year investment in Hasbro earned you a total return of 6.53% compounded annually. You would have received $2,835.60 in dividend income to either offset your expenses or reinvest in the company. Had you reinvested in more Hasbro stock your returns would have been even better.
A 10 or 20 year investment in the Hasbro toy company would have turned out pretty decent for investors. It appears the better returns have come in the most recent decade which happens to correspond with Hasbro’s dividend growth record. Before Hasbro began a dividend growth policy, the dividends paid by the company weren’t very substantial. Currently Hasbro pays a very nice dividend yield of 3.40% and trades at a P/E of just under 19.
It is my opinion that Hasbro would have turned out to be a great investment for those buying shares 10 years ago and an OK investment had you bought shares 20 years ago. In both situations the shareholder has increased their wealth.
I want to point out that I am not taking into account the company’s valuation 10 or 20 years ago. I am merely looking at how you would have fared if you had purchased the stock exactly 10 or 20 years ago. If the company was overvalued at the time of your purchase, your returns will generally be lower. If the company was undervalued at the the time of your purchase, returns generally will do well. Stock valuation at the time of purchase is one of the most important things to take into consideration. Even a great investment will not turn out great if you pay too much for it.
What do you think? Do you own Hasbro stock? Would you have been happy with these returns over the past couple decades? Where do you see this company going in the future?
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