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Why Franklin Resources (BEN) is a Top Dividend Stock for Your Portfolio

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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.

Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Franklin Resources in Focus

Franklin Resources (BEN - Free Report) is headquartered in San Mateo, and is in the Finance sector. The stock has seen a price change of 36.81% since the start of the year. Currently paying a dividend of $0.28 per share, the company has a dividend yield of 3.28%. In comparison, the Financial - Investment Management industry's yield is 1.3%, while the S&P 500's yield is 1.3%.

Looking at dividend growth, the company's current annualized dividend of $1.12 is up 3.7% from last year. In the past five-year period, Franklin Resources has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.19%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Franklin Resources's current payout ratio is 40%. This means it paid out 40% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, BEN expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $3.17 per share, with earnings expected to increase 21.46% from the year ago period.

Bottom Line

From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer a quarterly payout.

High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, BEN is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).


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