Jim Cramer’s Dividend Play: Hasbro Inc. (NYSE:HAS)
“Investors could’ve seen the earnings beat at toy maker Hasbro Inc. (NYSE:HAS) coming, if they had been paying attention to the company’s dividend boost last Thursday,” Jim Cramer said on Monday’s “Mad Money” TV show. On Thursday the company increased its dividend by a big 25%, the fourth-largest percentage dividend increase so far this year. “Dividend increases are the true harbingers of what the health of the market is,” Cramer said, ” not the oil futures, the dollar or gold.” He explained that had investors been paying attention to the big dividend boost, they could have seen the company’s 28-cent-a-share earnings beat coming. Cramer said Hasbro is a lot more than just a Monopoly. That’s why he recommended the stock on July 19, when it was trading at $25.14. Since that recommendation, the stock has soared 38%. Cramer said if you want to make money in the markets one of the best ways is to buy stocks with high yields that reinvest their dividends. He pointed out that with Hasbro this effect is amplified when the company raises its dividend, giving you compounding and increasing dividends. “These high yielders are less susceptible to getting annihilated in a brutal sell-off,” Cramer said, “because of something called yield support.” As the stock price drops, its dividend yield goes higher, and right now Hasbro has a 2.8% yield, but if the stock was to drop to $33.33, it would yield 3%, and at $28.57 it would yield 3.5%. Cramer told viewers to buy the stock at $33 or less because of that yield. He mentioned that Hasbro is just what the doctor ordered in a chaotic market. Cramer said Hasbro is expected to earn $2.13 a share in 2o10 and $2.76 in 2011, and that’s more than twice its new annualized dividend of $1 a share. Plus, the company’s entertainment licensing revenues were up 48% year over year, and Hasbro has several blockbuster movies such as Iron Man 2 and Toy Story 3 set to launch soon. Cramer said Hasbro should continue to the stock, and dividend, growth investors are looking for. the scoop on tomorrow’s hottest trade ideas – TODAY! BeaconEquity.com PREMIER PICKS have an amazing track record. Join this select group and ride the profit wave!
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