The news isn’t all that great. But does it really matter?

Mattel (Nasdaq: MAT) hasn’t gotten a whole lot of good press lately. It has struggled for several years. Mattel’s largest brand, Barbie, has been mired in a sales slump. It also recently lost its Disney licenses to rival Hasbro (Nasdaq: HAS). And just recently, Lego surpassed it to become the largest toymaker in the world.

Income investors are intrigued by Mattel’s 6.6% dividend yield, but are understandably concerned about the sustainability of the dividend.

Mattel has paid a dividend since 1991 and raised it significantly each year between 2012 and 2014. But the dividend growth has been on hold over the past year as Mattel tries to sort things out.

Over the past four quarters, Mattel generated $462 million in free cash flow. It paid out $514 million in dividends.

That’s not good. We want to see dividends paid be less than free cash flow so that we know the business can sustain the dividend.

Despite the company’s woes, the dividend may be in better shape than you think.

The company replaced its CEO, brought back a top executive who rescued the Barbie brand years ago and has taken other steps to fix its business.

Furthermore, Mattel has $300 million in cash, and the fourth quarter is coming up, which is, by far, its biggest quarter of the year in terms of revenue and cash flow.

And if the company has only a $50 million shortfall during a period that can be described as disastrous, it should have absolutely no problem paying that dividend once performance improves, even just a bit.

Next year, analysts, who are overwhelmingly bearish on the stock, expect free cash flow to climb high enough to cover the dividend.

Admittedly, that’s not a lock. And it’s why the stock has fallen so hard and the yield is so high.

On Mattel’s second quarter conference call, CEO Chris Sinclair said, “we remain on track to fund our turnaround initiatives fully and we continue to be comfortable with our cash position and our commitment to the current dividend.”

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