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Franklin (BEN) Rewards Investors With a 3.4% Dividend Hike
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Franklin Resources, Inc.’s (BEN - Free Report) board of directors announced a 3.4% hike in its quarterly dividend. The company will pay a dividend of 30 cents per share, up from 29 cents paid out in the prior quarter. The increased dividend will be paid out on Jan 13, 2023, to shareholders of record as of Dec 30, 2022.
Considering the company’s last day’s closing price of $27.70, its dividend yield currently stands at 4.33%.
Notably, BEN has hiked its dividend every year since 1981. Prior to this hike, the company increased its dividend by 3.6% in December 2021 to 29 cents per share.
In addition to paying regular quarterly dividends, the company has a share repurchase plan in place. In April 2018, it announced a repurchase authorization of up to 80 million shares. In fiscal 2022, the company repurchased 6.5 million shares for $180.8 million and had 24.4 million shares remaining under the authorization.
Thus, supported by efficient capital deployment activities, BEN is expected to keep enhancing shareholder value.
The stock looks attractive, based on the annual rise in dividend income. However, let’s check out the company’s fundamentals and financial performance before taking any investment decision.
In the past few years, Franklin has grown through acquisitions, thereby enhancing its foothold. In November 2022, the company closed the acquisition of Alcentra, one of the largest European alternative credit managers. In April 2022, it completed the acquisition of Lexington, which boosted its alternative asset offerings. In December 2021, it closed the acquisition of OSAM, which will further enhance its presence in the separately managed account space.
Franklin also concluded the all-cash acquisition of Legg Mason in July 2020. The strategic and financial benefits from the acquisition exceeded the firm’s targets and augmented its growth opportunities. These acquisitions, along with several more, are expected to support the company in improving and expanding its alternative investments and multi-asset solution platforms.
While Franklin’s assets under management (AUM) balance declined in fiscal 2022, it saw a compound annual growth rate (CAGR) of 23.3% over the last four fiscal years (ended fiscal 2022). The company’s efforts to diversify its business into asset classes that are seeing growing client demand like alternative asset classes will likely propel AUM growth.
Further, Franklin’s stock looks undervalued with respect to its price-to-sales (P/S) and price-to-earnings (P/E) ratios. It has a P/E (F1) ratio of 10.86 compared with the industry average of 11.08. Also, the P/S ratio of 1.63 is below the industry average of 2.43.
The company’s shares have gained 16.5% in the past six months compared with the industry’s rise of 15.6%.
Image Source: Zacks Investment Research
Based on the above-mentioned factors, Franklin's stock looks like an attractive investment option now. However, some of the negatives are mentioned below, which we must consider.
Franklin has been witnessing an increase in expenses over the past several years. Its expenses witnessed a CAGR of 15.7% over the last four fiscal years (ended 2022). As the company continues investments in technology-related distribution opportunities and developing its proprietary tokenization and digital asset products, we expect expenses to remain elevated in the upcoming period and thus weigh on the firm’s bottom-line expansion.
Moreover, analysts are not very optimistic regarding the company’s earnings growth prospects. The Zacks Consensus Estimate for BEN’s current-fiscal year earnings has been revised 4.6% lower over the past 30 days. The company’s earnings are projected to decline 31.4% in fiscal 2023.
Raymond James Financial, Inc.’s (RJF - Free Report) board of directors announced a quarterly cash dividend of 42 cents per share, representing an increase of 24% from the prior payout. The new dividend will be paid out on Jan 17, 2023, to shareholders of record as of Jan 3, 2023.
Raymond James has a record of regularly raising dividends over the last decade. Prior to the recent hike, the company announced a 31% increase in its quarterly dividend to 34 cents in December 2021.
Bank7 Corp.’s (BSVN - Free Report) board of directors approved a hike in the quarterly dividend. The new dividend of 16 cents per share represents a hike of 33.3% from the prior payout. The dividend will be paid out on Jan 5, 2023, to shareholders of record as of Dec 23, 2022.
This is the third consecutive annual increase in BSVN’s quarterly cash dividend. Prior to this hike, the company increased its dividend by 10% to 12 cents per share in December 2021.
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Franklin (BEN) Rewards Investors With a 3.4% Dividend Hike
Franklin Resources, Inc.’s (BEN - Free Report) board of directors announced a 3.4% hike in its quarterly dividend. The company will pay a dividend of 30 cents per share, up from 29 cents paid out in the prior quarter. The increased dividend will be paid out on Jan 13, 2023, to shareholders of record as of Dec 30, 2022.
Considering the company’s last day’s closing price of $27.70, its dividend yield currently stands at 4.33%.
Notably, BEN has hiked its dividend every year since 1981. Prior to this hike, the company increased its dividend by 3.6% in December 2021 to 29 cents per share.
In addition to paying regular quarterly dividends, the company has a share repurchase plan in place. In April 2018, it announced a repurchase authorization of up to 80 million shares. In fiscal 2022, the company repurchased 6.5 million shares for $180.8 million and had 24.4 million shares remaining under the authorization.
Thus, supported by efficient capital deployment activities, BEN is expected to keep enhancing shareholder value.
The stock looks attractive, based on the annual rise in dividend income. However, let’s check out the company’s fundamentals and financial performance before taking any investment decision.
In the past few years, Franklin has grown through acquisitions, thereby enhancing its foothold. In November 2022, the company closed the acquisition of Alcentra, one of the largest European alternative credit managers. In April 2022, it completed the acquisition of Lexington, which boosted its alternative asset offerings. In December 2021, it closed the acquisition of OSAM, which will further enhance its presence in the separately managed account space.
Franklin also concluded the all-cash acquisition of Legg Mason in July 2020. The strategic and financial benefits from the acquisition exceeded the firm’s targets and augmented its growth opportunities. These acquisitions, along with several more, are expected to support the company in improving and expanding its alternative investments and multi-asset solution platforms.
While Franklin’s assets under management (AUM) balance declined in fiscal 2022, it saw a compound annual growth rate (CAGR) of 23.3% over the last four fiscal years (ended fiscal 2022). The company’s efforts to diversify its business into asset classes that are seeing growing client demand like alternative asset classes will likely propel AUM growth.
Further, Franklin’s stock looks undervalued with respect to its price-to-sales (P/S) and price-to-earnings (P/E) ratios. It has a P/E (F1) ratio of 10.86 compared with the industry average of 11.08. Also, the P/S ratio of 1.63 is below the industry average of 2.43.
The company’s shares have gained 16.5% in the past six months compared with the industry’s rise of 15.6%.
Image Source: Zacks Investment Research
Based on the above-mentioned factors, Franklin's stock looks like an attractive investment option now. However, some of the negatives are mentioned below, which we must consider.
Franklin has been witnessing an increase in expenses over the past several years. Its expenses witnessed a CAGR of 15.7% over the last four fiscal years (ended 2022). As the company continues investments in technology-related distribution opportunities and developing its proprietary tokenization and digital asset products, we expect expenses to remain elevated in the upcoming period and thus weigh on the firm’s bottom-line expansion.
Moreover, analysts are not very optimistic regarding the company’s earnings growth prospects. The Zacks Consensus Estimate for BEN’s current-fiscal year earnings has been revised 4.6% lower over the past 30 days. The company’s earnings are projected to decline 31.4% in fiscal 2023.
BEN currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dividend Hikes by Other Firms
Raymond James Financial, Inc.’s (RJF - Free Report) board of directors announced a quarterly cash dividend of 42 cents per share, representing an increase of 24% from the prior payout. The new dividend will be paid out on Jan 17, 2023, to shareholders of record as of Jan 3, 2023.
Raymond James has a record of regularly raising dividends over the last decade. Prior to the recent hike, the company announced a 31% increase in its quarterly dividend to 34 cents in December 2021.
Bank7 Corp.’s (BSVN - Free Report) board of directors approved a hike in the quarterly dividend. The new dividend of 16 cents per share represents a hike of 33.3% from the prior payout. The dividend will be paid out on Jan 5, 2023, to shareholders of record as of Dec 23, 2022.
This is the third consecutive annual increase in BSVN’s quarterly cash dividend. Prior to this hike, the company increased its dividend by 10% to 12 cents per share in December 2021.