Asset managers SEI Investments Co. (SEIC) and Lazard Ltd. (LAZ) jumped on the bandwagon of boosting shareholders’ value. Both the companies have announced new capital deployment programs.
Pennsylvania-based SEI Investments announced a 6.7% increase in its regular half-yearly dividend to 16 cents per share. The board of directors at the company also announced a one-time, special cash dividend of 32 cents per share. Both the dividends will be payable on Dec 28, 2012 to shareholders of record on Dec 21, 2012.
Additionally, SEI Investment’s board of directors approved a $50 million increase in its existing share repurchase program. Therefore, this resulted in rise in repurchase authorization to roughly $100 million. Year-to-date, the company repurchased approximately 7.1 million shares for approximately $146 million. As of Sep 30, 2012, cash and short-term investments at SEI Investment were $398 million.
Likewise, New York-based Lazard’s board of directors approved a special dividend of 20 cents per share on its outstanding Class A common stock. Further, the payment and record dates of Lazard’s regular quarterly dividend of 20 cents per share has been preponed from Feb 2013. The special dividend along with the regular dividend is payable on Dec 27, 2012 to stockholders of record on Dec 21, 2012.
Lazard’s financial position is strong and exposed to lower risk. Cash and cash equivalents as of Sep 30, 2012, totaled $883 million. Moreover, the company has returned $432 million to shareholders, year-to-date. This includes returning the targeted $200 million of surplus cash to shareholders by 2013.
Earlier another asset management firm, Franklin Resources Inc. (BEN) enhanced its quarterly common stock dividend by 7% to 29 cents per share, which will be paid on Dec 31, 2012 to shareholders of record as of Dec 14, 2012. This marks Franklin’s 32nd consecutive year of dividend increase, reflecting its commitment to return value to shareholders with its strong cash generation capabilities. In mid-November, Franklin announced a special cash dividend of 3 cents per share payable on Dec 20 to shareholders of record as of Dec 6.
Further, T. Rowe Price Group Inc. (TROW) declared a special cash dividend of $1.00 per share, which will be paid on Dec 28 to stockholders of record as of Dec17.
These capital deployment actions by the asset management firms are part of the strategy to enhance shareholders’ value through prudent capital management. Further, the declaration of special dividends comes as a result of probable increase in tax on dividends from 2013.
SEI Investments and Lazard both retain a Zacks #3 Rank, which translates into a short-term Hold rating. We believe that the announcement of enhanced capital deployment activities will be an appropriate step for these companies to enhance investors’ confidence, which might lead to positive estimate revisions in the near term. This, in turn, could cause an improvement in their Zacks Rank.
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