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Mattel's 6% Dividend Looks Too Good To Be True

As the saying goes, something that looks too good to be true is often just that. Nowhere is this more evident right now than in very high-yield dividend stocks. Chasing yield when the underlying business is deteriorating can be one of the most painful investing experiences of all. Sky-high yields lure investors with the prospect of juicy dividend payments rolling in, but these yields are frequently a signal of trouble and a crashing stock price. Many extreme high-yielders soon cut their dividends to stay afloat, and investors suffer the brutal combination of lost income and a declining stock price.

I believe toy maker Mattel, Inc. (NASDAQ:MAT) is in danger of becoming the latest example of this. Mattel had a terrible year in 2014. Sales declined and earnings collapsed, as Mattel's Barbie and Fisher-Price brands continued to fall out of favor with consumers. As games become increasingly popular on devices such as smartphones and tablets, traditional toys simply aren't selling as well as they used to. Read more