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Franklin Resources: A Dividend Champion With A 5.29% Yield

Published Tue, 15 Sep 2020 14:20:57 -0400 on Seeking Alpha

Seeking AlphaDividend Ideas | Financials Franklin Resources: A Dividend Champion With A 5.29% YieldSep. 15, 2020 2:20 PM ET|| About: Franklin Resources, Inc. (BEN), Includes: MOby: Dumb WealthDumb Wealth Dividend Investing, Macro, portfolio strategy, goldDumb Wealth.cls-1{fill:#024999;}SummaryFranklin Resources has been in decline, as the asset management industry faces huge fee and margin pressures.
The recently closed Legg Mason acquisition adds scale by roughly doubling Franklin Resources' assets under management.
Franklin Resources has paid a dividend for decades and its 5 year dividend growth is in the top 20 of all Dividend Champions.
I believe the valuation is cheap and the dividend is well supported.
Take one look at the Franklin Resources (BEN) stock chart and you'd think this company is a dud. After all, the price has been in decline since 2014, and the share price is back to where it was in 2009 and 2004.
Despite the disappointing share price performance, BEN has been one of the top 20 fastest growing 'Dividend Champions' over the past five years. Over the past five and ten years, the dividend has grown by 16.72% and 14.02% annualized respectively. BEN has paid a dividend for over 40 years consistently and today yields an attractive 5.29%. (Source: Dividend Champions)
So what gives? Why is the share price falling while the company is quickly growing dividends?
Data by YCharts
The problem - in a nutshell - is revenues. The decline in BEN's share price is reflecting the decline in actual and projected revenues. While this is a highly profitable company, with gross margins in the 40%+ range, asset management margins across the industry are under considerable pressure. With the proliferation of low-cost index funds, industry flows have shifted to cheaper products, forcing all fund manufacturers to reduce fees. This has pressured fee revenues, there are no signs the trend is letting up and investors are staying away. It's almost as if... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
ALTRIA GROUP 44.46   13.2 3.36 3.36 7.23

ALTRIA GROUP - MO
ALTRIA GROUP - MO  


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