Hiccup's toy is a small dragon toy that was given to him by his mother when he was young. Ironically, Hiccup was terrified of Dragons and threw it into the sea during a fishing trip. A lucky fisherman found it in his net one day, and it eventually wound up with Trader Johann who alerted Stoick about it. Stoick decided to get it back for Hiccup. Then Trader Johann lost his ship in Breakneck Bog, with the toy still on board. The Riders help Hiccup find it.
The toy is a doll-stitched dragon with visible stitches at its seams and buttons for eyes. The dragon appears to have four legs, two wings and a spiked crest at the back of its head. It seems to resemble a Deadly Nadder with four legs or a Night Fury with a horn. It is also possible it isn't supposed to resemble any dragon. Most probably due to wear and tear underwater as well as time, the toy is a little shabby and filthy. Hiccup's name is stitched into both sides of the toy.
In a flashback in How to Train Your Dragon 2, Hiccup's toy appears in a short cameo in the second film. In Valka's flashback, Hiccup was in a crib where he encountered Cloudjumper. The toy can be spotted at the right foot of his crib and once again when Stoick picked him up.
As shown in "Breakneck Bog", Trader Johann informed Hiccup that he has a long-lost gift for him. After retrieving the gift, which was placed in a tiny chest, Hiccup opened it, only to see a doll-stitched toy that he vaguely remembers. Stoick then proceeds to tell him about how his mother had made it for him when he was just an infant and how he had lost a week's sleep as he was terrified of it. He continues recounting the story of Hiccup disposing of the toy when they were out fishing and how it landed up in a fishing net shortly before the events of the episode.
Reunited with the toy, Hiccup explains how he was afraid to forget his mother after 'losing' her and treasures it greatly for it reminds him of her. He keeps the toy on his bed's headboard ever since.