Mattel Investors Anxious To See Their Dividend Cut, May Have To Wait To June

Shares of Mattel, Inc. MAT plunged 13 percent Friday and hit a new 52-week low of $21.78 after the company reported disappointing first-quarter results. The sell off has created a unique opportunity for dividend investors as the stock is currently yielding nearly 7 percent.

There is some concern that Mattel's $0.38 per share quarterly dividend is unsustainable and may need to be slashed.

According to UBS's Arpine Kocharyan, Mattel's analyst day in June will provide some insight into the sustainability of the dividend. The analyst noted that the company's board hasn't yet reviewed management's new strategic priorities after naming an ex-Google executive Margo Georgiadis as CEO in early 2017.

What Could Be Next?

Kocharyan also stated that expectations for Mattel remain "tough," but the company's sales decline proved to be worse than expected.

Specifically, the company-wide first-quarter point of sale at the end of March (not adjusted for Easter) is down slightly year-over-year versus expectations versus expectations for at least a high-single to a double-digit decline in the quarter. The analyst noted that the company didn't quantify its Easter-adjusted sales and he believes the sales number is "at least flat" year-over-year, which is better than most expectations.

The analyst suggested that Mattel is "potentially setting up for nice up for nice ship-in bump in Q2 under core brands, outside of entertainment slate-tied segments."

Shares of Mattel remain Buy rated with an unchanged $32 price target.

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