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This Well-Known Mid-Cap Stock Raises Dividends Like Clockwork

 April 24, 2012 12:23 PM
 


(By Street Authority) "Safe" and "mid-cap" probably aren't words investors use together very often, since mid-cap stocks are generally riskier than the stock market as a whole. For instance, if you invested in iShares S&P MidCap 400 Index (NYSE: IJH), an exchange-traded fund (ETF) that tracks the S&P 400 index of medium-size U.S. companies, then you could expect the fund to be about 20% more volatile than the stock market as a whole.

You'd be doing yourself a disservice, though, if you simply wrote off all mid-cap stocks as being more risky, because not all of them are. One of my favorites, a well-known toy company that was founded in 1945 and is most famous for making Barbie fashion dolls, is actually 14% LESS volatile than the market.

I'm referring to the world's largest toy manufacturer, Mattel Inc. (Nasdaq: MAT), which also sells toys under successful brands like Fisher-Price, Hot Wheels, Tyco and Match Box. The company had overall revenue of $6.3 billion in 2011, and analysts see it rising by a solid 5% in 2012 to more than $6.6 billion.

Since a healthy dividend is one of the main things that can dampen a stock's volatility, consider Mattel's payout. The stock has a world-class dividend of $1.24 a share, which is good for a yield of about 4% based on the current share prices. So if you held $10,000 worth of Mattel, or around 300 shares, your annual payout would be $372 -- not a bad reward at all for simply holding a stock.

What's more, Mattel's payout has a history of steady growth, rising by 11.5% a year for the past five years and by 8.5% a year for the past decade. The latest increase occurred on Jan.


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