Franklin Resources Inc.
) hiked its quarterly common stock dividend by 20% from the prior
quarter payout to 12 cents per share. The new dividend will be
paid on Jan 10, 2014 to shareholders of record as of Dec 31,
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The latest move is Franklin's 34
consecutive dividend increase. This reflects the company's
commitment to return value to shareholders with its strong cash
generation capabilities. Prior to this, the company increased its
dividend by 3% after the stock split to 10 cents per share in Sep
Notably, in Jun 2013, Franklin announced a 3-for-1 stock split,
which was paid as stock dividend on Jul 25, 2013 to common
shareholders of record as of Jul 12, 2013. Therefore, the recent
hike in dividend is the second increase after the stock split.
Moreover, Franklin's board of directors announced authorization
of 30 million shares of its common stock in either open market or
off-market transactions. Notably, this authorization is an
addition to about 9.7 million shares of common stock that are
available for repurchase under the company's existing common
stock buyback program, which is not subject to an expiry date as
of Nov 30, 2013.
Such capital deployment activities are part of Franklin's
long-term strategy to enhance shareholder value. The strategy
also includes investment in profitable businesses while
sustaining financial stability and flexibility.
Based in San Mateo, California, Franklin is a global investment
management organization operating as Franklin Templeton
Investments with about $871 billion in assets under management
(AUM). The organization provides an array of global and domestic
investment management solutions under 7 brands: Franklin
Templeton, Mutual Series, Bissett, Fiduciary Trust, Darby,
Balanced Equity Management and K2.
Despite stiff market competition, Franklin has significant
long-term upside potential. Based on its disciplined and cautious
approach, Franklin makes investments in the public equity and
fixed income markets across the globe through its subsidiaries.
In the fiscal year ended Sep 30, 2013, the company paid roughly
$882.7 million in dividends to common shareholders. Cash and cash
equivalents, along with investments at the end of the period were
$8.6 billion. Moreover, the company repurchased common stock
worth $491 million in the same period.
Earlier this week, the company declared preliminary AUM of $870.6
billion by its subsidiaries for Nov 2013. The company's results
witnessed a marginal increase from $869.0 billion in the prior
month. Moreover, it surged 13.2% from $768.8 billion as of Nov
Franklin's global footprint is an exceptionally favorable
strategic point as its AUM is well diversified. The company is
also poised to benefit from its strong balance sheet. We believe
the announcement of a dividend increase will augur well for the
company and help boost shareholders' confidence. However,
regulatory restrictions and sluggish economic recovery could
limit AUM growth and increase costs. Additionally, higher
expenses remain a concern.
Franklin currently carries a Zacks Rank #3 (Hold). Some
better-ranked investment managers include
Waddell & Reed Financial, Inc.
Virtus Investment Partners, Inc.
Artisan Partners Asset Management Inc.
). All these stocks have a Zacks Rank #1 (Strong Buy).