- Oops!Something went wrong.Please try again later.
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Franklin Resources in Focus
Based in San Mateo, Franklin Resources (BEN) is in the Finance sector, and so far this year, shares have seen a price change of 6.36%. The investment manager is paying out a dividend of $0.28 per share at the moment, with a dividend yield of 4.21% compared to the Financial - Investment Management industry's yield of 1.56% and the S&P 500's yield of 1.47%.
In terms of dividend growth, the company's current annualized dividend of $1.12 is up 3.7% from last year. In the past five-year period, Franklin Resources has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.68%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Franklin Resources's current payout ratio is 41%. This means it paid out 41% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for BEN for this fiscal year. The Zacks Consensus Estimate for 2021 is $3.01 per share, which represents a year-over-year growth rate of 15.33%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that BEN is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Franklin Resources, Inc. (BEN) : Free Stock Analysis Report
To read this article on Zacks.com click here.