Franklin Resources Inc's Dividend Analysis
Assessing the Sustainability of Franklin Resources Inc's Dividend
Franklin Resources Inc (NYSE:BEN) recently announced a dividend of $0.31 per share, payable on 2024-01-12, with the ex-dividend date set for 2024-01-02. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Franklin Resources Inc's dividend performance and assess its sustainability.
What Does Franklin Resources Inc Do?
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Franklin Resources provides investment services for individual and institutional investors. At the end of October 2023, Franklin had $1.335 trillion in managed assets, composed primarily of equity (31%), fixed-income (35%), multi-asset/balanced (11%) funds, alternatives (19%) and money market funds (4%). Distribution tends to be weighted equally between retail investors (50% of AUM) and institutional accounts (48%), with high-net-worth clients accounting for the remainder. Franklin is one of the more global of the U.S.-based asset managers we cover, with more than a third of its assets under management invested in global/international strategies and 29% of managed assets sourced from clients domiciled outside the United States.
A Glimpse at Franklin Resources Inc's Dividend History
Franklin Resources Inc has maintained a consistent dividend payment record since 1982. Dividends are currently distributed on a quarterly basis. Franklin Resources Inc has increased its dividend each year since 1982. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 42 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Franklin Resources Inc's Dividend Yield and Growth
As of today, Franklin Resources Inc currently has a 12-month trailing dividend yield of 4.03% and a 12-month forward dividend yield of 4.16%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, Franklin Resources Inc's annual dividend growth rate was 3.60%. Extended to a five-year horizon, this rate increased to 5.00% per year. And over the past decade, Franklin Resources Inc's annual dividends per share growth rate stands at an impressive 11.60%.
Based on Franklin Resources Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Franklin Resources Inc stock as of today is approximately 5.17%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Franklin Resources Inc's dividend payout ratio is 0.70, which may suggest that the company's dividend may not be sustainable.
Franklin Resources Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Franklin Resources Inc's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Franklin Resources Inc's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Franklin Resources Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Franklin Resources Inc's revenue has increased by approximately 12.30% per year on average, a rate that outperforms approximately 59.67% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Franklin Resources Inc's earnings increased by approximately -0.10% per year on average, a rate that outperforms approximately 38.98% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 12.90%, which outperforms approximately 64.04% of global competitors, indicates a healthy operational efficiency.
Next Steps
In conclusion, Franklin Resources Inc's long-standing history of dividend payments and its status as a dividend aristocrat is commendable. The company's recent dividend announcement continues this tradition, offering investors a solid yield. However, the sustainability of these dividends may be a concern given the current payout ratio. Nonetheless, Franklin Resources Inc's strong profitability and growth metrics provide a reassuring perspective on the company's ability to maintain its dividend payments. Value investors should consider these factors carefully while contemplating the addition of BEN to their portfolios. Will Franklin Resources Inc's dividends continue to reward shareholders in the years to come? Only time will tell, but the indicators suggest a company with the potential to continue its dividend legacy.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
