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SEI Investments Ups Dividend: Is There More Upside Left?

Zacks Equity Research

SEI Investments Company SEIC announced a 7% hike in its semi-annual dividend. The dividend of 30 cents will be paid on Jan 8, 2018 to the shareholders on record as of Dec 27.

Considering last day’s closing price of $71.12 per share, the dividend yield currently is 1.69%. Notably, the company has been increasing dividend annually since 2009.

Further, SEI Investments has a share repurchase plan in place. Earlier in October, the company authorized additional $200 million share buyback plan, thus increasing repurchase authorization to $230.5 million.

Driven by impressive capital deployment activities and continued growth in revenues, the stock has rallied 44.1% year to date, outperforming 31.1% growth for the industry.

So, is the stock a prudent investment option based on steady capital deployment activities? Let’s dig into its fundamentals before taking any decision.

SEI Investments has been witnessing consistent improvement in revenues. Over the last five years (2012-2016), the company’s revenues recorded a CAGR of 9%, with the trend continuing in the first nine months of 2017 as well.

The company’s diversified product and revenue mix, steady asset inflows as well as its strong global presence and the acquisition of Archway Technology Partners in July reflect improving prospects going forward.

On the other hand, mounting expenses remain a major concern for SEI Investments. Expenses saw a CAGR of 7.1% over the last five years (2012-2016), with a similar trend persisting in the first nine months of 2017 as well. Management expects expenses to remain elevated over the next couple of years due to additional investment spending on services.

Nonetheless, SEI Investments’ earnings are projected to grow 16.3% for 2017 and 15% for 2017.  Also, the company’s trailing 12-month return on equity (ROE) reflects its superiority in terms of utilizing shareholders’ fund. The company’s ROE of 27.12% compares favorably with 12.92% for the industry.

Currently, SEI Investments carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other investment managers that have raised their dividends in the recent past are Eaton Vance Corp. EV, Franklin Resources Inc. BEN and Raymond James Financial, Inc. RJF.  Eaton Vance hiked its quarterly dividend 10.7%, while Raymond James increased its dividend by 13.6% and Franklin has announced 15% rise.

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