Should You Retain Franklin (BEN) for 5.2% Dividend Yield?

Core Viewpoint - Franklin Resources, Inc. (BEN) is positioned as a solid investment opportunity for investors seeking attractive dividend yields in a volatile macroeconomic environment, with a current dividend yield of 5.22% compared to the industry average of 1.90% [1][4]. Group 1: Dividend and Share Repurchase - BEN announced a 3.3% increase in its common stock dividend to 31 cents in December 2023, marking the fifth increase in five years with an annualized growth rate of 3.5% [1]. - The company has a share repurchase program, authorizing the repurchase of 27.2 million shares in December 2023, in addition to the 12.8 million shares available for repurchase at the end of November 2023 [2]. - In the first quarter of 2024, BEN repurchased 0.4 million shares for $11.7 million, indicating consistent capital distribution activities that may enhance investor confidence [2]. Group 2: Financial Health - As of March 31, 2024, BEN had a debt of $3.04 billion, which has decreased over recent quarters, and a liquidity position of $5.7 billion, suggesting a lower likelihood of default on debt repayments [3]. - The company's strong earnings and liquidity position support its ability to sustain dividend payments even in adverse economic conditions [3]. Group 3: Growth and Acquisitions - BEN has experienced a compounded annual growth rate (CAGR) of 18.7% in assets under management (AUM) over the last five fiscal years, despite a decline in fiscal 2022 [4]. - The company completed the acquisition of Putnam Investments in January 2024, which is expected to enhance its growth in the retirement space and increase its defined contribution AUM to over $100 billion [3][4]. - BEN's diversification into alternative asset classes is anticipated to further drive AUM growth, aligning with growing client demand [4]. Group 4: Market Performance - Over the past six months, BEN's shares have declined by 2.5%, contrasting with a 22.2% rally in the industry [4].