Franklin Declares Share Buyback - Analyst Blog

In an effort to return wealth to investors and boost their confidence in the stock, Franklin Resources Inc. (BEN) announced an increase in quarterly dividend as well as an addition to its stock repurchase program.

Franklin hiked its quarterly dividend by 14% to 25 cents per share and announced a buyback plan of up to an additional 10.0 million shares of its common stock in either open market or off-market transactions. This new share repurchase authorization is in addition to its existing repurchase authorization of around 2.2 million shares remaining.

Franklin has increased its dividend for the thirtieth consecutive year. The dividend is payable on January 7, 2011, to common stockholders of record as of the close of business on December 31, 2010. There is no expiration date for the share repurchase authorization and the size and time of such purchases will depend on price, market and business conditions and other factors.

Franklin Resources, which competes with BlackRock Inc. (BLK) and Federated Investors Inc. (FII), reported impressive year-over-year growth in its preliminary month-end assets under management (AUM) earlier in this month.

The company's AUM of $642.3 billion at the end of November 30, 2010, registered an increase of 19.0% year over year; but fell 3.3% from the previous month. As of September 30, 2010, Franklin reported AUM of $644.9 billion, up from $523.4 billion at the end of the year-ago period and $570.5 billion as of June 30, 2010.

Despite being well positioned with a diversified AUM and balance sheet, in our opinion, Franklin is not immune to the volatile economic environment at all; its revenues and AUM bear witness to its vulnerability. With the market gradually showing signs of revival, the company is expected to post better results in the quarters ahead.

Franklin Resources currently retains its Zacks #3 Rank, which translates to a short-term Hold rating.

 
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