She’s 58 years old, and she doesn’t look a day over 21. We refer to Barbie, the ubiquitous and still fashionable doll manufactured by Mattel (MAT), quips Ian Wyatt, editor of High Yield Wealth.

Mattel has sold over a billion Barbie dolls since her March 1959 debut, making it the company’s largest and most popular line. After 58 years, Barbie’s popularity continues to trend higher.

Mattel might be synonymous with Barbie, but there is much more to Mattel including the popular Hot Wheels and Matchbox vehicles, and for younger children, Fisher-Price Brands.

Last year, Mattel sold $5.5 billion worth of playthings. Unfortunately, it’s not as many as sold in the recent past — and sales and earnings have trended lower. 

It’s no surprise that Mattel’s share price has trended in the same direction -- down. In 2013, Mattel shares were changing hands at around $45 each. Today, you can buy the stock for under $26.

One problem was the loss of a key licensing pact with Disney (DIS). A surging U.S. dollar is another problem. Sales of Mattel’s American Girl Brands have also lagged in recent years.

For income investors, the dividend is the most pressing concern. Earnings have failed to cover the dividend since 2013. Can the dividend be sustained given the sales and earnings trends in recent years? 

We think the dividend can be sustained. Earnings don’t cover the dividend, but free cash does. Mattel still generates sufficient cash. Free cash flow was $2.45 per share last year.

Mattel just brought in a new CEO, Margaret Georgiadis. We think Georgiadis has the talent to turn words into action.  As President of the Americas segment of Google (GOOGL) from 2011-to-2017, Georgiadis led the company's commercial operations and ad sales in the U.S., Canada, and Latin America.

We’re most excited about the new strategic partnership with Alibaba (BABA) to sell Mattel toys in China. The partnership gives Mattel closer access to Alibaba's 440 million active buyers. Initial sales are planned for mid-2017.

Where you are going matters more than where you have been when vetting investment opportunities. We don’t particularly like where Mattel has been, but we do like where it is going. 

We see deep value in an iconic consumer brand. With a 6% dividend yield and a believable plan to turn around operations, Mattel should begin to convert its detractors to supporters sooner than later.

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