2022 Week 12: Franklin Resources (NYSE: BEN)

Portfolio Update

The FiveTwenty portfolio received $167.23 in dividends in the past week. K, MMM, ORI, and VFC paid their quarterly dividends during the week.

Past Week Dividend$167.23
Current Quarter Dividend (Q1 2022)$995.69
LifeTime Dividend$3,106.50
Estimated Annual Dividend$4,774.88
Dividend Scorecard

The capital allocation for the week of 03/20/2022 to 03/26/2022 will be used to add to our position in Franklin Resources (NYSE: BEN)

BEN – Position Update

Since our last check-in on BEN in week 52 of 2021, the company reported Q1 2022 earnings on 02/01/2022. In addition, the share price decreased 17.3% from $33.42 to $27.65.

TTMPrev. Update10-year median
Dividend Streak42 years42 years
Yield4.05%3.35%1.82%
Payout Ratio27.63%129.95%2
P/E6.7618.942
Entry Criteria Scorecard

1 computed using TTM adjusted EPS of $4.09 as of Q1 2022
2 computed using TTM adjusted EPS of $3.74 as of Q4 2021

Q1 2022 earnings report

Did BEN’s latest earnings report raise any warning flags?

For Q1 2022, BEN posted strong financial results. Revenue grew 11%, adjusted net earnings increased 48%, and adjusted EPS were 48% higher compared to Q1 2021. Additionally, the company finished the quarter with AUM of $1,578 billion which represents an increase of 3% over Q4 2021 and an increase of 5% over Q1 2021.

Revenue
(in millions)
Adj. Net Income
(in millions)
Adj. EPS
.
Q1 2021$1,995.1$373.4$0.73
Q1 2022$2,224.0$553.6$1.08
% Change11%48%48%

Additional noteworthy developments during the quarter:

  • BEN repurchased 0.7 million shares of its common stock for $21.7 million during the quarter ended 12/31/2021.
  • When it announced a Q4 dividend of $0.29 per share on 12/14/2022, the company marked its 42nd year of dividend increases.
  • On 12/31/2022, BEN closed the previously announced acquisition of O’Shaughnessy Asset Management (OSAM), a quantitative asset management firm with $6.9 billion in AUM.
  • On 2/23/2022, the company declared a quarterly dividend of $0.29 per share payable on 04/14/2022 to shareholders of record as of the close of business on 03/31/2022.
  • BEN announced AUM of $1,486.9 at 02/28/2022 a decrease compared to the previous month.

Thesis

Why are we adding to our position in BEN?

Since the Russian invasion of Ukraine stock markets have seen a significant correction. This in turn has pushed the value of AUM for financial companies down and put pressure on their share price. BEN has been no exception.

However, following a strong Q1 2022, our long-term thesis has not changed. We are content to add to our position at an improved valuation and wait for the markets to recover.

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