Is Franklin Resources' Dividend Safe?

In the world of investing, dividends are an important aspect of stock ownership. They provide investors with a steady stream of income and can also indicate thefinancial healthof a company. One company that investors may be wondering about is Franklin Resources. Is Franklin Resources' dividend safe? Let's take a closer look.

Financial Overview of Franklin Resources

Franklin Resources, also known as Franklin Templeton, is a global investment management firm that offers a range of investment products and services. As of June 30, 2021, the company had $1.5 trillion in assets under management, making it one of the largest asset managers in the world.

In terms of financials, Franklin Resources reported total revenue of $6.5 billion for fiscal year 2020, a decrease from the previous year. However, the company still managed to generate net income of $1.1 billion, which translates to earnings per share of $2.24.

Dividend History of Franklin Resources

Franklin Resources has a long history of paying dividends to its shareholders. In fact, the company has paid a dividend every quarter since it went public in 1981. As of September 2021, the current dividend yield for Franklin Resources is 3.2%.

However, the company did cut its dividend in 2020 due to the economic uncertainty caused by the COVID-19 pandemic. The quarterly dividend was reduced from $0.27 per share to $0.04 per share, a significant decrease. Since then, the dividend has been slowly increasing, with the most recent dividend payment at $0.28 per share.

Factors That Could Impact Franklin Resources' Dividend

While Franklin Resources has a strong dividend history, there are several factors that could impact the safety of its dividend going forward.

First, the company's revenue has been decreasing in recent years, which could impact its ability to continue paying dividends. Additionally, theasset management industryis highly competitive, and Franklin Resources could face increased pressure on its fee structure, which could impact its earnings.

Another factor to consider is the company's debt level. As of June 30, 2021, Franklin Resources had $2.2 billion in long-term debt. While this is not an alarming amount, it is important to monitor the company's debt level, as high levels of debt can put pressure on a company's ability to pay dividends.

Investment Considerations

Investors who are considering investing in Franklin Resources should carefully evaluate the company's financials and dividend history before making a decision. It is important to consider the factors that could impact the safety of the dividend, as well as the overall financial health of the company.

Additionally, investors should consider diversifying their portfolio to reduce risk. This could include investing in a mix of stocks, bonds, and other assets. By diversifying, investors can protect themselves against the risks associated with individual companies and industries.

Conclusion

In summary, while Franklin Resources has a long history of paying dividends, there are several factors that could impact the safety of its dividend going forward. Investors should carefully evaluate the company's financials and dividend history before making a decision to invest. Additionally,diversificationis an important strategy for reducing risk in any investment portfolio.