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Is Franklin Resources (BEN) Worth a Watch for Robust Dividends?
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Amid high inflation and a looming global economic downturn in the near term, investors must keep an eye on high dividend-yielding stocks. One such stock is Franklin Resources, Inc. (BEN - Free Report) .
This San Mateo, CA-based investment management company derives the majority of its operating revenues and net income by offering investment management and related services to retail mutual funds, institutional and private accounts, and other investment products. Franklin Resources has been increasing its quarterly dividend on a regular basis. Over the past five years, the company increased its dividend six times, with an annualized dividend growth rate of 4.7%.
On Jun 8, Franklin Resources announced a cash dividend of 30 cents per share. The dividend will be paid on Jul 14, 2023, to shareholders of record as of Jun 30, 2023.
Considering the last day’s closing price of $26.40, Franklin Resources’ dividend yield currently stands at 4.5%. This is impressive compared with the industry average of 2.7% and attractive for income investors as it represents a steady income stream.
Further, the company has a share repurchase plan in place to buy back up to 80 million shares. It repurchased 6.5 million shares for $180.8 million in fiscal 2022 and 0.6 million shares for $17.8 million during the first six months of fiscal 2023. As of Mar 31, 2023, 23.7 million shares remain under the current authorization. These indicate encouraging capital deployment activities.
Capital disbursement aside, should you keep an eye on Franklin Resources to earn a high dividend yield? Let’s check out the company’s fundamentals to understand the risks and rewards. This will help us make a proper investment decision.
Franklin Resources has a decent earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once, with the average surprise being 6.7%. The rising trend is likely to continue in the upcoming years as well. While it is projected to decline in 2023, It is likely to rebound by 10.5% in 2024.
Franklin Resources’ assets under management (AUM) recorded a compound annual growth rate (CAGR) of 23.3% over the last four fiscal years (ended fiscal 2022). While AUM declined in fiscal 2022 on a volatile landscape, the trend reversed in the first six months of fiscal 2023, with the company witnessing a rise in AUM on the back of decent market performance. Also, it is making efforts to diversify its business into asset classes that are seeing growing client demand, like alternative asset classes. This will likely propel AUM growth and top-line expansion in the upcoming period. We expect AUM to reflect a CAGR of 5.5% by 2025.
Franklin Resources continues to focus on growing its presence through strategic acquisitions. In May 2023, the company entered into a strategic partnership with Power Corporation of Canada and Great-West Lifeco, Inc. to acquire Putnam Investments to accelerate its growth in the retirement markets. This also adds scale and efficiency to the mutual fund platform.
Additionally, 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, boosting its alternative asset offerings. These acquisitions will support the company in improving and expanding its alternative investments and multi-asset solutions platforms.
Franklin Resources holds organic growth prospects in several areas. The company’s relatively strong distribution platform has increased diversification inflows across funds, vehicles and asset classes, as well as key business growth. It has been an early entrant in many foreign markets, enjoying a first-mover advantage. Growth prospects bode well for the firm since it continues to diversify its business to muster broader sources of revenue.
Currently, Franklin Resources has a debt/equity ratio of 0.85. This compares favorably with the industry average of 28.26. Given a low debt/equity ratio than its peers, the company is expected to be financially stable, even in adverse economic conditions.
Despite near-term headwinds that include rising expenses and macroeconomic uncertainties, BEN is fundamentally solid. In the past three months, shares of Franklin Resources have gained 0.4% compared with the industry's rise of 8.5%.
A couple of other finance stocks like Ares Capital Corporation (ARCC - Free Report) and Heritage Commerce Corp (HTBK - Free Report) are worth a look as these too have robust dividend yields.
Considering the last day’s closing price, Ares Capital’s dividend yield currently stands at 10%. Over the past three months, shares of ARCC have gained 7.1%.
Based on the last day’s closing price, Heritage Commerce’s dividend yield currently stands at 6%. Over the past three months, shares of HTBK have lost 3.3%.
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Is Franklin Resources (BEN) Worth a Watch for Robust Dividends?
Amid high inflation and a looming global economic downturn in the near term, investors must keep an eye on high dividend-yielding stocks. One such stock is Franklin Resources, Inc. (BEN - Free Report) .
This San Mateo, CA-based investment management company derives the majority of its operating revenues and net income by offering investment management and related services to retail mutual funds, institutional and private accounts, and other investment products. Franklin Resources has been increasing its quarterly dividend on a regular basis. Over the past five years, the company increased its dividend six times, with an annualized dividend growth rate of 4.7%.
On Jun 8, Franklin Resources announced a cash dividend of 30 cents per share. The dividend will be paid on Jul 14, 2023, to shareholders of record as of Jun 30, 2023.
Considering the last day’s closing price of $26.40, Franklin Resources’ dividend yield currently stands at 4.5%. This is impressive compared with the industry average of 2.7% and attractive for income investors as it represents a steady income stream.
Franklin Resources, Inc. Dividend Yield (TTM)
Franklin Resources, Inc. dividend-yield-ttm | Franklin Resources, Inc. Quote
Further, the company has a share repurchase plan in place to buy back up to 80 million shares. It repurchased 6.5 million shares for $180.8 million in fiscal 2022 and 0.6 million shares for $17.8 million during the first six months of fiscal 2023. As of Mar 31, 2023, 23.7 million shares remain under the current authorization. These indicate encouraging capital deployment activities.
Capital disbursement aside, should you keep an eye on Franklin Resources to earn a high dividend yield? Let’s check out the company’s fundamentals to understand the risks and rewards. This will help us make a proper investment decision.
Franklin Resources has a decent earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once, with the average surprise being 6.7%. The rising trend is likely to continue in the upcoming years as well. While it is projected to decline in 2023, It is likely to rebound by 10.5% in 2024.
Franklin Resources’ assets under management (AUM) recorded a compound annual growth rate (CAGR) of 23.3% over the last four fiscal years (ended fiscal 2022). While AUM declined in fiscal 2022 on a volatile landscape, the trend reversed in the first six months of fiscal 2023, with the company witnessing a rise in AUM on the back of decent market performance. Also, it is making efforts to diversify its business into asset classes that are seeing growing client demand, like alternative asset classes. This will likely propel AUM growth and top-line expansion in the upcoming period. We expect AUM to reflect a CAGR of 5.5% by 2025.
Franklin Resources continues to focus on growing its presence through strategic acquisitions. In May 2023, the company entered into a strategic partnership with Power Corporation of Canada and Great-West Lifeco, Inc. to acquire Putnam Investments to accelerate its growth in the retirement markets. This also adds scale and efficiency to the mutual fund platform.
Additionally, 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, boosting its alternative asset offerings. These acquisitions will support the company in improving and expanding its alternative investments and multi-asset solutions platforms.
Franklin Resources holds organic growth prospects in several areas. The company’s relatively strong distribution platform has increased diversification inflows across funds, vehicles and asset classes, as well as key business growth. It has been an early entrant in many foreign markets, enjoying a first-mover advantage. Growth prospects bode well for the firm since it continues to diversify its business to muster broader sources of revenue.
Currently, Franklin Resources has a debt/equity ratio of 0.85. This compares favorably with the industry average of 28.26. Given a low debt/equity ratio than its peers, the company is expected to be financially stable, even in adverse economic conditions.
Despite near-term headwinds that include rising expenses and macroeconomic uncertainties, BEN is fundamentally solid. In the past three months, shares of Franklin Resources have gained 0.4% compared with the industry's rise of 8.5%.
Image Source: Zacks Investment Research
Therefore, income investors should keep this Zacks Rank #3 (Hold) stock on their radar as it will help generate robust returns over time. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Other Finance Stocks With Solid Dividends
A couple of other finance stocks like Ares Capital Corporation (ARCC - Free Report) and Heritage Commerce Corp (HTBK - Free Report) are worth a look as these too have robust dividend yields.
Considering the last day’s closing price, Ares Capital’s dividend yield currently stands at 10%. Over the past three months, shares of ARCC have gained 7.1%.
Based on the last day’s closing price, Heritage Commerce’s dividend yield currently stands at 6%. Over the past three months, shares of HTBK have lost 3.3%.