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High Dividend 50: Franklin Resources, Inc.

Published on June 26th, 2024 by Felix Martinez

High-yield stocks pay out dividends that are significantly more than market average dividends. For example, the S&P 500’s current yield is only ~1.2%.

High-yield stocks can be very helpful to shore up income after retirement. A $120,000 investment in stocks with an average dividend yield of 5% creates an average of $500 a month in dividends.

Franklin Resources (BEN) is part of our ‘High Dividend 50’ series, which covers the 50 highest-yielding stocks in the Sure Analysis Research Database.

We have created a spreadsheet of stocks (and closely related REITs and MLPs, etc.) with dividend yields of 5% or more…

You can download your free full list of all securities with 5%+ yields (along with important financial metrics such as dividend yield and payout ratio) by clicking on the link below:


Next on our list of high-dividend stocks to review is Franklin Resources, Inc. (BEN).

Business Overview

Franklin Resources, Inc., commonly known as Franklin Templeton, is a global investment management organization founded in 1947 and headquartered in San Mateo, California.

The company offers various investment solutions, including mutual funds, ETFs, and other specialized strategies, catering to individual and institutional investors worldwide.

With a presence in over 30 countries, Franklin Templeton leverages its diverse investment expertise and global reach to manage assets across various asset classes, including equities, fixed income, alternatives, and multi-asset strategies.

The firm is renowned for its active management approach, aiming to deliver superior long-term performance through in-depth research and disciplined investment processes.

Source: Investor Relations

In the 2024 first quarter, Franklin Resources grew ending assets under management (AUM) by 13.0% from the prior quarter to $1.64 trillion, and by 15.7% from the prior year. This growth was largely driven by the acquisition of Putnam Investments, favorable market conditions, and net inflows.

Average AUM also saw a substantial rise of 13.4% from the prior quarter to $1.58 trillion, marking an 11.4% increase from the previous year. Investment performance improved notably, with 62%, 51%, 62%, and 69% of the strategy composite AUM outperforming their respective benchmarks over 1-, 3-, 5-, and 10-year periods, respectively.

For mutual funds, 51%, 60%, 44%, and 56% outperformed their peers over these same time-frames. Long-term net inflows were strong at $6.9 billion, bolstered by $13.7 billion from Great-West Lifeco’s allocation.

Fixed Income, Multi-Asset, and Alternative asset classes generated positive net flows, with major alternative managers contributing $1.4 billion in net inflows.

Separately, managed accounts (SMA) AUM reached $138 billion with positive net flows for the fourth consecutive quarter.

Source: Investor Relations

Canvas, the Custom Indexing solution platform, saw net inflows of $0.8 billion and a 23% increase in AUM to $7.2 billion. ETFs ended the quarter with $24 billion in AUM and generating $1.6 billion in net inflows, marking the 10th consecutive quarter of positive flows.

Additionally, non-US AUM totaled $490 billion, with positive net flows in non-US regions for the fourth straight quarter. The institutional pipeline grew by $6.6 billion to $19.8 billion, not accounting for the remaining allocation from Great-West.

Growth Prospects

Franklin Resources known for its global investment management expertise, is well-positioned for robust growth in the coming years. The company’s growth prospects are buoyed by its strategic acquisitions and expansion into new markets.

Recent acquisitions, such as the purchase of Legg Mason, have significantly enhanced Franklin Templeton’s product offerings and expanded its global footprint. These acquisitions not only diversify the company’s portfolio but also strengthen its presence in high-growth regions, particularly in Asia and Europe.

Franklin Templeton’s continued investment in technology and digital platforms aims to enhance client engagement and operational efficiency, further solidifying its competitive edge in the rapidly evolving investment landscape.

We expect the company to grow its annual earnings-per-share by 5% per year over the next five years.

Competitive Advantages & Recession Performance

Franklin Resources has several competitive advantages that position it favorably within the investment management industry. One of its key strengths is its global diversification, with a presence in over 30 countries and a broad array of investment products, including equities, fixed income, alternatives, and multi-asset strategies.

This extensive reach allows the company to tap into diverse markets and attract a wide range of clients.

Separately, Franklin Templeton’s emphasis on active management and its robust research capabilities provide a significant edge, enabling it to deliver strong, long-term performance across various market conditions.

The strategic acquisition of Putnam Investments further enhances its portfolio and market presence, strengthening its competitive position.

During economic downturns, Franklin Templeton’s resilience is underscored by its diversified asset base and strong balance sheet. Furthermore, its commitment to innovation ensures continued relevance and client engagement, supporting its performance even during recessions.

The company performed poorly during the previous major economic downturn, the Great Recession of 2008-2009:

BEN has increased its dividend for 44 consecutive years, placing it on the exclusive Dividend Aristocrats list.

Dividend Analysis

Franklin Resources’s annual dividend is $1.24 per share. At its recent share price, the stock has a high yield of 5.4%.

Given the company’s earnings outlook for 2024, EPS is expected to be $2.46. As a result, the company is expected to pay out roughly 50% of its EPS to shareholders in dividends.

The dividend appears sustainable, and we estimate the company will grow it at a 2% rate going forward. Overall, the 5.4% dividend yield is desirable for investors focusing primarily on income.

Final Thoughts

Franklin Resources shares are down more than 20% year to date, and has deeply underperformed the S&P 500 Index in that time.

Franklin Resources is a classic asset manager that is battling the rise of low-cost investing, responsible for customers moving money from actively managed funds to ETFs. Its core business is declining, but the financial foundation – allowing for share repurchases, solid payouts, and acquisitions – has been solid.

BEN is a hold recommendation for income investors, due to its high yield and satisfactory payout ratio.

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