Franklin Resources Hikes Dividend By 4%; Street Sees 12% Downside

Franklin Resources (BEN) announced a 3.7% hike in its quarterly dividend to $0.28 per share from $0.27. The investment management company has raised its dividend annually since 1981.

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Franklin Resources said that the new dividend will be paid on Jan. 15, 2021, to shareholders of record as of Dec. 31, 2020. The company’s annual dividend of $1.12 per share now reflects a dividend yield of 2.1%.

Earlier in October, Franklin Resources reported mixed 4Q results. Its adjusted earnings of $0.56 per share missed the Street’s estimates of $0.68 per share and declined from the $0.71 per share posted in the year-ago period. Meanwhile, the 4Q operating revenue of $1.71 billion declined 2% year-over-year but exceeded the consensus estimate of $1.47 billion. (See BEN stock analysis on TipRanks)

On Nov. 23, KBW analyst Robert Lee downgraded the stock to Hold from Buy, citing its valuation. Lee said that on a P/E basis, Franklin Resources is “slightly richer” now relative to the pre-COVID levels. The maintained a price target of $23 (6.6% downside potential).

Meanwhile, the Street has a cautiously bearish outlook on the stock. The Moderate Sell analyst consensus is based on 6 Holds, 4 Sells and 1 Buy. The average price target stands at $21.64 and implies downside potential of about 12.1% to current levels. Shares have dropped by 5.2% year-to-date.