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This is Why Franklin Resources (BEN) is a Great Dividend Stock
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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Franklin Resources in Focus
Based in San Mateo, Franklin Resources (BEN - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 39.22%. The investment manager is paying out a dividend of $0.28 per share at the moment, with a dividend yield of 3.22% compared to the Financial - Investment Management industry's yield of 1.43% and the S&P 500's yield of 1.28%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.12 is up 3.7% from last year. Over the last 5 years, Franklin Resources has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.19%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Franklin Resources's current payout ratio is 40%, meaning it paid out 40% of its trailing 12-month EPS as dividend.
BEN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $3.17 per share, representing a year-over-year earnings growth rate of 21.46%.
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. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that BEN is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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This is Why Franklin Resources (BEN) is a Great Dividend Stock
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Franklin Resources in Focus
Based in San Mateo, Franklin Resources (BEN - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 39.22%. The investment manager is paying out a dividend of $0.28 per share at the moment, with a dividend yield of 3.22% compared to the Financial - Investment Management industry's yield of 1.43% and the S&P 500's yield of 1.28%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.12 is up 3.7% from last year. Over the last 5 years, Franklin Resources has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.19%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Franklin Resources's current payout ratio is 40%, meaning it paid out 40% of its trailing 12-month EPS as dividend.
BEN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $3.17 per share, representing a year-over-year earnings growth rate of 21.46%.
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. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that BEN is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).