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Franklin Resources Delivers Big Return To Investors
By: Investor's Business Daily
Investment services firmFranklin Resources ( BEN ) has increased its dividend every year since 1981.
The latest increase was in December. The big-cap company raised the quarterly dividend from 27 cents to 29 cents a share. The annualized yield is 0.9%.
While the 0.9% yield might appear puny, the company as often as not has paid an additional special dividend. In the past eight years, a special dividend was paid in four of those years, ranging from $2 to $3 a share. In December, Franklin paid a special dividend of $3 a share.
Theoretically an investor who bought shares at the start of last year gained 4.3% from special and quarterly dividends combined and enjoyed an additional 31% gain from stock-price appreciation.
This easily outperformed the indexes, which rose 13% to 16%.
Successful investors don't rely on dividends alone to define success. In most cases, price appreciation is more important.
Franklin Resources, which is also known as Franklin Templeton Investments, has clients in 150 countries. The company was founded in 1947, and acquired legendary investor John Templeton's firm in 1992. The Templeton acquisition gave Franklin a portfolio of international funds and knowledge of emerging markets.
After the 2007-09 recession, Franklin's earnings rose 64% in fiscal 2010, 36% in 2011 and 4% in 2012. The Street sees 10% in fiscal 2013.
The five-year earnings Stability Factor is 28 on a gauge that runs from 0 (calm) to 99 (wild). The three-year factor is better at 11.
Revenue growth has varied. Over the past 19 fiscal years, revenue grew 25% or more six times, 15% to 22% five times, in single digits four times and was flat or declined four times.
On Feb. 1 before the market open, Franklin will release results for fiscal Q1 ended in December. The Street expects EPS to grow 8%. Revenue is expected to roll ahead 11% -- the best in five quarters.
One factor unusual for a company of Franklin Resources' size is its history of CEOs. Founded by Rupert Johnson, the CEO spot has stayed in the family. Current CEO Gregory Johnson is the grandson of the founder.