Franklin Resources Inc.
) enhanced its quarterly common stock dividend by 3% over the
prior quarter to 10 cents per share. The dividend will be paid on
Oct 11 to shareholders of record as of Sep 30, 2013.
This marks Franklin's 33rd consecutive year of dividend increase,
reflecting the company's commitment to return value to
shareholders with its strong cash generation capabilities. Prior
to this, the company increased its dividend by 7% before the
stock split (from 27 to 29 cents per share) in Dec 2012.
Notably, in Jun 2013, Franklin announced a 3-for-1 stock split,
which was paid as stock dividend on Jul 25, 2013 to common
stockholders of record as of Jul 12, 2013. Therefore, the recent
hike in dividend is the first increase after the stock split.
The dividend increase is part of Franklin's long-term strategy to
enhance shareholder value through prudent capital management. The
strategy also includes investment in profitable businesses while
sustaining financial stability and flexibility.
Based in San Mateo, Calif., Franklin is a global investment
management organization operating as Franklin Templeton
Investments with about $817 billion in assets under management
(AUM). The organization provides an array of global and domestic
investment management solutions managed by Franklin, Templeton,
Mutual Series, Fiduciary Trust, Darby and Bissett investment
Despite active competition, the company has a significant
long-term upside potential. Based on its disciplined and cautious
investment approach, Franklin makes investments in the public
equity and fixed income markets across the globe through its
During the nine months ended Jun 30, 2013, the company paid
roughly $821.1 million in dividends to common shareholders. Cash
and cash equivalents along with investments ended the period were
$6.1 billion. Moreover, the company repurchased common stock
worth $226.4 million during the same period.
Earlier this week, the company declared preliminary AUM of $817.3
billion by its subsidiaries for Aug 2013. The company's results
witnessed a fall of 2% from $834.1 billion in the prior month.
However, it bolstered 11.8% from $731 billion as of Aug 31, 2012.
Among its peers,
Legg Mason Inc.
) also experienced a decline of 1.8% and 3.4%, respectively, in
AUM in August.
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 mar
AUM growth and increase costs. Additionally, higher expenses
remain a matter of concern.
Franklin currently carries a Zacks Rank #3 (Hold). However, a
better performing company in the same industry with a Zacks Rank
#2 (Buy) is
Affiliated Managers Group Inc.
AFFIL MANAGERS (AMG): Free Stock Analysis
FRANKLIN RESOUR (BEN): Free Stock Analysis
INVESCO LTD (IVZ): Free Stock Analysis Report
LEGG MASON INC (LM): Free Stock Analysis
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