Last week, Franklin Resources Inc. ( BEN ) increased its quarterly common stock dividend by 8% to 27 cents per share. The dividend will be paid on December 30 to shareholders of record as of December 19.
This marks Franklin's 31 th consecutive year of dividend increase, reflecting the company's commitment to return value to shareholders with its strong cash generation capabilities. Prior to this revision, the company increased its dividend by 14% (from 22 cents to 25 cents per share) in December 2010.
Concurrently, Franklin also announced the payment of special cash dividend of 2 cents per share. The special dividend will be paid in addition to the new dividend.
The dividend increase is part of Franklin's long-term strategy to enhance shareholder value through a prudent capital management. 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 $675.8 billion in assets under management (AUM) as of November 30, 2011. The organization provides a broad array of global and domestic investment management solutions managed by Franklin, Templeton, Mutual Series, Fiduciary Trust, Darby and Bissett investment teams.
Recently, the company declared preliminary AUM by its subsidiaries for the end of November 2011. The results were down 2.6% from $694.1 billion as of October 31, 2011, but up 5.2% from $642.3 billion as of November 30, 2010. Moreover, among peers, Legg Mason Inc. ( LM ) and Invesco Ltd. ( IVZ ) also experienced a decline in AUM in November.
Preliminary month-end AUM came in at $620.6 billion for Legg Mason, down 1.3% from $628.7 billion at the end of October. Further, Invesco's AUM for November fell 2.1% to $622.4 billion from $635.7 billion at the end of October 2011. The decrease in Invesco's November AUM was primarily driven by negative market returns.
On a quarterly basis, as of September 30, 2011, total AUM was $659.9 billion for Franklin, down from $734.2 billion as of June 30, 2011, attributed to market depreciation. AUM inched up 2% year over year, mainly due to net new flows and acquisitions, partially offset by market depreciation.
Simple monthly average AUM during the quarter inched down 2.0% sequentially and increased 18.0% year over year to $714.4 billion. At the end of the quarter, net new flows were $3.1 billion versus $21.7 billion in the prior quarter and $19.4 billion in the prior-year quarter.
Despite active competition, the company has a significant long-term upside potential. Based on its disciplined risk-aware investment approach, Franklin makes investments in the public equity and fixed income markets across the globe through its subsidiaries.
In fiscal 2011 ending September 30, 2011, the company paid roughly $216.3 million in dividends to common shareholders. Cash and cash equivalents exiting the year were $4.7 billion.
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. Moreover, the recently completed acquisitions are expected to strengthen its financial results. However, the regulatory restrictions and sluggish economic recovery could mar the AUM growth and increase costs.
Franklin currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Further, considering the fundamentals, we are maintaining a long-term Neutral recommendation on the stock.