If you invested $ 10,000 in the Hasbro IPO, that’s how much money you would have now
Hasbro (NASDAQ: HAS) started in the 1920s and spent those early years making textiles and pencils. He didn’t make his first toy until Mr. Potato Head in the 1950s. By the time Hasbro went public (IPO) in 1968, the brand was famous for GI Joe, which accounted for two-thirds of sales. of the company at the time.
Even though the stock market experienced a long bear market in the first decade after Hasbro’s IPO, an investment in the stock would have had a big effect on your financial situation today.
An exercise in patience
On October 10, 1968, the first shares were sold to the public at a pre-split price of $ 15. The stock split eight times, with a 10% stock dividend in 1981. Some of the divisions were at odd ratios, like 3 to 2, meaning you would have received three stocks for every two held. After all the splits, one share would have turned into 62.65 shares today.
An investment of $ 10,000 at the IPO price would have bought 666.67 shares, which would be worth $ 3.8 million at the current price 52 years later.
However, investors should have shown great patience to endure the first few years. The data in this chart only goes back to 1972, but it illustrates the effect the crushing bear market had on many investors from the early to mid-1970s.
It would be very hard to believe that a stock in your portfolio that fell 84% would net you $ 3.8 million and pay you six-figure dividend income.
That’s right. Hasbro began paying a dividend in 1977 and has paid a dividend every year since 1981. The current quarterly payment is $ 0.68 per share, so the 41,765 shares you currently own would pay $ 113,600 to your brokerage account each. year.
Still a good investment?
Today Hasbro is best known for brands like Transformers, Nerf, Play-Doh, My Little Pony and Magic: The Gathering. Its business activities cover digital games, films, music, toys, consumer products and virtual reality experiences.
Global demand for toys has been weak in recent years as today’s youth spend more time with digital experiences. But that hasn’t stopped Hasbro.
Still, stocks have managed to offer a modest return of 48% over the past five years. The company recently had to contend with not only changing consumer preferences, but also the bankruptcy of Toys “R” Us, which left a void in Hasbro’s distribution channel.
Management is currently focused on integrating the acquisition of Entertainment One, which enhances Hasbro’s storytelling capabilities in music, film and television. These are some of the areas where management is investing more and more to connect with the new generation.
Hasbro has enough opportunities in games, movies, and television to remain at least a modest performing growth stock. It should generate a lot of profit and pay an increasing dividend over time.
But the short term could be a bit bumpy. Stocks stumbled to start 2020 on a soft outlook for the coming year. But value investors may find the stock’s modest valuation and the above-average 3.02% dividend yield appealing.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.