If you're looking for classic American brands, you could do a lot worse than Fisher-Price, Barbie, American Girl, and Hot Wheels. All four fall under Mattel's (NASDAQ:MAT) umbrella, along with dozens of newer and smaller toy and game brands. The company has been up and down over the last three years, owing much of its volatility to the reliance on popular movies and TV shows for its boys' brands.

Mattel's stock peaked in 2013, riding the highs of a return to strength for Barbie and American Girl. This year hasn't been as kind, and the stock is down 28% so far in 2014. Earnings per share through the halfway point fell 84%, down to $0.05 from $0.32 in the first half of last year.

Cash concerns at Mattel
Even with the downturn, Mattel has committed to rewarding its investors, raising its dividend by 6% this year and spending another $100 million on share repurchases.

That's cutting into the company's free cash, though. Free cash flow for fiscal 2013 was a mere $446 million, down from over $1 billion in fiscal 2012. The company blamed the drop on an increase in "working capital usage," which included a $138 million paid for a legal settlement.

Even with less cash coming in, Mattel had no problem spitting out $494 million in dividends last year. The fact that it ran over its free cash flow is bad news for investors, as a prolonged period of overspending could seriously cut into the company's ability to continue growing its dividend.

Toys are changing faster than Mattel
Mattel's cash problem is largely a sales problem. We'll talk about the company's shortcomings in a moment, but first let's look at the landscape that Mattel is operating within. According to the Toy Industry Association, domestic sales of traditional toys have all but stopped growing totaling $22.09 billion in 2013 versus $22.03 billion in 2012.

Analysts have been happy to point the finger at different video game systems, but there are no definitive answers. American kids are just buying fewer toys. Toys R Us has seen the same sorts of problems that have plagued Mattel, with its comparable sales falling 5% in the U.S. last year.

Sales inconsistency
For Mattel, this year has been better than the last, but it's still not strong. Because Mattel makes so much of its money in the second half of the year, cash flow from operations is usually negative in the first half. This year, though, Mattel has spent less in the first half, resulting in cash flow used in operations coming in at $79 million compared to a $286 million hit in 2013.

Mattel has a problem with consistency in its earnings and expenditures. The company has had a lot of hit products in the last few years, but it seems to have trouble predicting when those hits will come and what to do in the downtimes in between. For dividend investors, it can be dangerous waiting to see if the company will have to dip into its stockpile of cash to make its payouts, or whether it can add to that pile.

While Mattel is paying out a relatively hefty 4.42% yield, the ups and downs that go along with the dividend make it a troubling long-term play. If Mattel can smooth out its production and earnings, then there might be more to investigate in the future. For now, though, investors looking for top dividend stocks should pass on Mattel.