Mattel Inc. is cutting its quarterly dividend by more than half, as new Chief Executive Margo Georgiadis looks to free up money to help the toy maker modernize its brands for the digital world and expand in emerging markets.
The El Segundo, Calif., company said it plans to pay 15 cents a share for the fiscal third quarter. Mattel paid 38 cents a share in previous quarters, but slumping profits have left it paying out more in dividends that it generated in earnings.
“We are right sizing our dividend, which will provide us the flexibility to fund our investments and affect this transformation plan,” Ms. Georgiadis said during a presentation Wednesday to analysts where she laid out her strategy for the maker of Barbie and Hot Wheels.
Chief Financial Officer Kevin Farr said Mattel will look to revert to a dividend payout ratio of between 50% and 60% of earnings. The company’s ratio swelled to more than 160% last year. Recently, Mattel had the second-highest dividend payout ratio among S&P 500 companies.
Mattel’s shares were down 1% to $22.41.
Write to Paul Ziobro at Paul.Ziobro@wsj.com