Thursday, April 23, 2015

Any thoughts on MAT??


Last September I bought 165 shares of MAT thinking it might be a good contrarian investment. The price at the time was around $30 and I have watched plummet to $22 at the beginning of this month only to come storming back in the last three weeks.

I can't completely wrap my hands around this stock. Is it a value trap or a turn around story. The good news is they have paid a couple of dividends already and are paying another one in June. But is that really what I want to invest in? A company that was fortunate to make another dividend payment for at least one more quarter. I don't know.

My hunch is this should be a $40 stock, but I would not be surprised to see $20 either. I am seriously considering selling my shares which are trading around $28.50 and taking an $80 loss counting the dividends I have already received.

I have tried to take steps to add lower beta companies to my portfolio this year and I might be better off adding another utility or perhaps more shares of companies like JNJ, CAT, or KO. The yields are lower, but the risk is much lower as well. Also any of these three could provide a stable YOC of 5% within the next four or five years anyway.

I think I am 80/20 leaning towards selling off the whole position. I really hate selling stocks and need to work harder at adding positions that I can keep for many years.

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22 comments:

  1. FrugalitytoFinancialFreedomApril 23, 2015 at 11:49 AM

    MAT is a huge player in the toy industry with Barbie as its flagship, but it is losing its mojo. Payout ratio is extremely high with a dividend 1.52 but with an eps of just 1.45. 2015 est eps is 1.36 and 2016 est eps of 1.53, I see dividend to be frozen and worst be cut. Top it off that MAT are losing the license to manufacture and sell the Disney princess to Hasbro by 2016. I sold my position.

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    1. AnonymousApril 23, 2015 at 12:34 PM

      Dividend was all ready frozen.

      Delete
    2. My Dividend PipelineApril 23, 2015 at 6:52 PM

      FFF,

      There are a lot of unknowns with MAT. It certainly seems like a lot of there cash cow products are slowing disappearing. It kind of reminds me of a large drug company that has hit drugs with expiring patents. It can be difficult to find the new "next thing" that can increase sales. I am leaning towards selling, but will probably hold off for at least a few more days.

      MDP

      Delete
  2. MrStockFoxApril 23, 2015 at 12:25 PM

    I agree with what FrugalitytoFinancialFreedom said above, but for now I am holding my 23 shares. I think its best to react on the news rather than try and predict what will happen.
    MrStockFox

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    1. My Dividend PipelineApril 23, 2015 at 6:54 PM

      MrStockFox,

      My inclination is to sell, but I keep second guessing myself. I will think it over during the weekend and hopefully make a decision next week.

      Thanks for the comment.

      MDP

      Delete
  3. AnonymousApril 23, 2015 at 12:34 PM

    Bunch of the dividend investor crow dumped it and it shortly went up over 26%. Has a lower P/E than HAS and Fisher Price is a good department. I bought a bunch of more shares last month when Dividend Mongrel and a couple others sold. Holding for now, very happy with the dividend.

    Long 315.895 shares.

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    1. My Dividend PipelineApril 23, 2015 at 6:56 PM

      Anonymous,

      Good job buying more shares at the bottom. I need to borrow your crystal ball. A few weeks ago were certainly pretty rocky and I thought sub $20 was going to happen. Hopefully shares continue to go up for you and the dividend stays in tact.

      MDP

      Delete
    2. AnonymousApril 23, 2015 at 7:54 PM

      I just read the Seeking Alpha comments. The ones they really hate on are the ones that bounce. Just look at the comments in the MSFT, HAS and SBUX threads.

      Delete
  4. Retire Before DadApril 23, 2015 at 1:04 PM

    MDP,
    I sold mine at $24.50. Seems low now, but I bought PM under $77 with the proceeds so it worked out for me. I laid out why I sold in a post if you didn't read it yet. Maybe anonymous above read it. I sold for the tax loss primarily, but I also don't think they can keep up the dividend. They did finally say in the recent call that it was a priority, but the numbers don't look great. If the div isn't cut (currently frozen), then maybe it is a good investment. If the stock falls below $24, I may start adding some again in my Loyal3 account. I don't have any doubt the brands are worth a lot, but management is certainly questionable now. I'd like to see the div firm up before getting back in.

    Also, if there's a pullback in the broader markets, I think it's quite vulnerable. Recent EPS was -0.08, revs down 2.5%. For it to really turn around, it has to have a good Christmas next year.
    -RBD

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    1. My Dividend PipelineApril 23, 2015 at 6:58 PM

      RBD,

      That's great that you reinvested your proceeds into PM. I too bought quite a few shares last month, but the price was closer to $80. I certainly feel more confident in PM's 5% yield than I do in MAT's 5% yield.

      Thanks for stopping over and commenting. I will check out your article.

      MDP

      Delete
  5. Dividend HustlerApril 23, 2015 at 1:05 PM

    Hey MDP. only you can answer your question. For myself, if this company is bothering you which it is and you'll thinking of selling, maybe you should. As dividend growth investors, we care about our dividend income and the safety of it. I know you're a value investor as well in unloved stocks so it's a tough call. I just sold a low quality oil company and put the funds in the bes pipelines in Canada. I sleep better now. Think it through bud. Take care MDP.

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    1. My Dividend PipelineApril 23, 2015 at 7:00 PM

      DH,

      Great points you bring up. I do like value plays, but I am really beginning to hate unreliable dividend payers. Sometimes the too go hand in hand. Energy companies are a great example of strong value but shaky dividends. I will probably continue to take a few risks, but I will focus on stronger companies than MAT.

      MDP

      Delete
  6. RoseRelishApril 23, 2015 at 1:54 PM

    I am going to keep my MAT shares. The company has expressed committment to the dividend - and they're able to keep it supported for a little while yet and hope for a turnaround in sales and earnings. Dividend aside, the shares are cheaper than Hasbro and cheaper than the market. It's disappointing that the price hasn't done too well lately, but the stock should provide adequate returns over time.

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    1. My Dividend PipelineApril 23, 2015 at 7:03 PM

      BGH,

      It is nice to know that there is a commitment to the dividend, but ultimately operations will determine future dividend payments. I am going to wait a bit longer and hopefully make a decision sometime next week. ESV's management supposedly was committed to its dividend and the reality was much different when oil prices kept falling.

      MDP

      Delete
  7. Div4sonApril 23, 2015 at 8:49 PM

    MDP, it looks like FCF will cover the dividends in the short term. The payout ratio is really bad though and the margins/ROE are decreasing indicating a loss in competitiveness. The efficiency ratios are worse than previous years.
    Once you're in though, it's hard to sell. Good luck with your decision.

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    1. My Dividend PipelineApril 24, 2015 at 8:51 AM

      Div4son,

      Thanks for the input. I agree the payout ratio is ugly. I am going to make a decision one way or the other some time next week.

      MDP

      Delete
  8. Average Dividend YieldApril 23, 2015 at 10:13 PM

    I don't want another ESV on my hands, so I'm thinking of selling my 100 shares tomorrow. Your question and comments received have cemented my decision. Thanks.

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    1. My Dividend PipelineApril 24, 2015 at 8:50 AM

      ADY,

      It looks like you are going to get a favorable price today with the Goldman upgrade.

      MDP

      Delete
  9. AnonymousApril 24, 2015 at 8:24 AM

    MAT is over $30 in premarket. I told you middle of last year, this are the same people that cheered you on and told you to buy more of the oil stocks and that the dividends were safe, while I told you to sell and the dividend were not safe. Now these were the same people that told you to sell MAT and now it is up nearly 10% since this gurus chimed in. You got one guy that sold it all most to the penny at the bottom - but somehow he was correct all along in selling.

    ReplyDelete
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    1. My Dividend PipelineApril 24, 2015 at 8:49 AM

      Anonymous,

      Wow! You are doing great! Do you have a site where you post your buys and sells in real time. It looks like you are making some great decisions. I would love to see them as they happen.

      Thanks in advance!

      MDP

      Delete
  10. Dividend DiplomatsApril 25, 2015 at 6:18 AM

    MDP,

    I'm in a similar boat. Down about $160ish in my position and have seen it roaring back. A story stock in my eyes, with the new CEO constantly pushing towards a new direction. I am reacting to this stock and want to read the 10Q and read what their plans are - this is important I believe, as it is a company, right? Bust that 10Q out and read what management's plans are. Also - I don't think us dividend investors alone can drive a stock $7+/share.... there has to be other layered causes for a stock to rise that much. Thoughts?

    -Lanny

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    1. My Dividend PipelineApril 25, 2015 at 2:07 PM

      Lanny,

      My thoughts are the upgrade Goldman gave it may not keep the stock for very long. I am close to dumping my position.

      MDP

      Delete

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