3/8/25
Franklin Resources, better known as Franklin Templeton, has been a big name in the investment management world for over 75 years. The company has built a strong reputation with its mutual funds, ETFs, and alternative investment strategies, serving both retail and institutional investors. While it was once primarily known for its mutual fund business, Franklin has been expanding into private credit, alternative investments, and global equity strategies in recent years.
Lately, the stock has faced some challenges. It’s currently trading around $20.32, which is well below its 52-week high of $28.61. While the share price has been under pressure, income-focused investors are more concerned with whether the company’s dividend is sustainable and whether it remains a strong candidate for a long-term income portfolio.
Key Dividend Metrics
🔹 Forward Dividend Yield: 6.30% 📈
🔹 Trailing Dividend Yield: 6.23% 🏦
🔹 5-Year Average Dividend Yield: 4.66% 🏁
🔹 Forward Annual Dividend: $1.28 per share 💵
🔹 Payout Ratio: 195.31% 🚨
🔹 Ex-Dividend Date: March 31, 2025 📅
🔹 Dividend Payment Date: April 11, 2025 💰
Dividend Overview
Franklin Resources offers an attractive dividend yield of 6.30%, which is considerably higher than its 5-year average of 4.66%. That alone makes it stand out for income investors, especially in an environment where many dividend stocks are yielding less.
However, there’s a significant concern with the payout ratio, which currently sits at 195.31%. In simple terms, the company is paying out almost twice as much in dividends as it earns in profit. That’s not a sustainable situation in the long run unless earnings recover. If profitability doesn’t improve, Franklin may have to make some tough decisions about its dividend in the future.
Dividend Growth and Safety
Franklin Resources has a long history of paying dividends, which is a positive sign for investors looking for reliable income. The company has increased its dividend for over 40 consecutive years, earning its place among the Dividend Aristocrats—an elite group of companies that have consistently raised their dividends for decades.
That being said, the pace of dividend growth has slowed recently. With earnings under pressure and the payout ratio sitting at unsustainable levels, it may be difficult for the company to continue increasing its dividend without a rebound in profitability.
Is the Dividend Safe?
✔ A 40+ year history of dividend payments shows commitment to shareholders
✔ Strong cash reserves provide some cushion
🚨 A payout ratio over 195% raises concerns
🚨 Earnings have declined 34.9% year-over-year
The track record is impressive, but without a turnaround in earnings, Franklin Resources’ dividend may not be as safe as it once was.
Chart Analysis
The price action and technical indicators in this chart provide a clear picture of where Franklin Resources (BEN) currently stands. While the stock has seen some short-term stabilization, it remains in a broader downtrend. Examining the moving averages, volume trends, and relative strength index (RSI) offers more insight into what might be happening beneath the surface.
Price Action and Moving Averages
The stock is trading below both the 50-day and 200-day moving averages, which typically signals a bearish trend. The 50-day moving average is sloping downward, showing that short-term momentum remains weak. The 200-day moving average is also trending lower, confirming that the long-term trend has been negative.
There was an attempt to break above the 50-day moving average in late December and early February, but those rallies were short-lived, failing to push higher before reversing back down. This suggests that sellers are stepping in at resistance levels, keeping the stock in a downward trajectory.
Volume Trends
Looking at the volume bars, there have been a few spikes, particularly in early September and February. The September surge likely represents either an institutional repositioning or earnings-related volatility, given the abrupt nature of the volume increase. More recently, the February spike in volume was associated with a sharp price move, but the stock ultimately failed to sustain upward momentum.
Aside from those events, volume has generally been declining, which means fewer traders and investors are participating in the stock’s movements. This often leads to weaker trends and makes it harder for price reversals to gain traction.
Relative Strength Index (RSI)
The RSI, displayed at the bottom of the chart, has been sitting in the lower range for much of the past several months. It briefly spiked in early February but quickly fell back. Right now, it’s moving higher but still remains below overbought territory, meaning there’s room for further upside if buying pressure increases.
A prolonged period of RSI below 50 typically signals a weak stock, while an upward turn from oversold levels can hint at a possible rebound. However, with the stock still below key resistance levels, this RSI movement alone isn’t enough to confirm a trend reversal.
Support and Resistance
The stock has been finding support around the $19 level, bouncing off that area a few times over the past months. However, each rally has struggled to break above the $22–$23 zone, where the 50-day and 200-day moving averages are acting as resistance.
For a meaningful reversal to take shape, the stock would need to break above the 50-day moving average and hold that level. Until then, rallies are more likely to face resistance, leading to more choppy or downward movement.
Analyst Ratings
Franklin Resources, Inc. (BEN) has recently been the focus of various analyst evaluations, offering a mix of optimism and caution regarding its future performance.
Upgrades
🔼 Wells Fargo: On January 8, 2024, Wells Fargo adjusted its outlook on Franklin Resources, raising its price target to $30. This upgrade came as the firm recognized Franklin’s strategic moves to improve operational efficiency and broaden its market presence. Analysts noted that recent acquisitions and cost-cutting measures could contribute to long-term stability and growth.
🔼 Goldman Sachs: In early January 2024, Goldman Sachs shifted its rating on Franklin Resources from sell to neutral, revising its price target to $22. The change was driven by Franklin’s efforts to diversify its investment portfolio and stabilize revenue, despite ongoing market challenges. The firm acknowledged that while headwinds persist, the company is making meaningful adjustments to adapt.
Downgrades
🔽 Evercore ISI: On March 7, 2025, Evercore ISI maintained its underperform rating, lowering its price target to $19 from $20. The firm cited concerns over rising operating expenses and the potential impact on earnings per share. Analysts expressed uncertainty about whether the company’s current cost structure could sustain profitability in a competitive asset management environment.
🔽 Goldman Sachs: On November 27, 2024, Goldman Sachs reiterated its sell rating, trimming its price target to $21 from $22. The downgrade was largely attributed to concerns over expense management and the company’s ability to maintain strong profit margins amid industry shifts.
Consensus Price Target
📊 As of the latest analyst evaluations, Franklin Resources holds a consensus price target of approximately $21.07, based on insights from 14 analysts. Price targets range from $18 on the low end to $24 on the high end, reflecting a wide range of opinions on the company’s near-term prospects.
These recent updates highlight the mixed sentiment surrounding Franklin Resources. While some analysts see value in the company’s long-term strategy, others remain cautious due to cost pressures and uncertain earnings growth. Investors should weigh these factors when evaluating the stock’s potential trajectory.
Earnings Report Summary
Franklin Resources, the parent company of Franklin Templeton, recently released its latest earnings report, giving investors a look at how the company is navigating the current market. The numbers showed a bit of a mixed picture—some encouraging signs of growth but also a few challenges that can’t be ignored.
For the quarter ending December 31, 2024, Franklin reported net income of $163.6 million, or $0.29 per share. That’s a big improvement from the previous quarter when the company posted a loss. However, compared to the same time last year, profits are down from $251.3 million, showing that there’s still some ground to make up.
Revenue for the quarter came in at $2.25 billion, a 2 percent increase from the previous quarter and up 13 percent year-over-year. Operating income also saw an improvement, bouncing back from a previous loss. These numbers suggest that, despite some industry-wide headwinds, Franklin is still finding ways to grow.
One area of concern is assets under management, which dropped to $1.58 trillion, down more than $100 billion from the previous quarter. Market conditions played a big role in that decline, but a significant portion of the drop also came from net outflows, particularly at Western Asset Management, a key part of the business.
On a more positive note, Franklin Templeton saw $17 billion in positive net flows in equity, multi-asset, and alternative investments. The firm also managed to secure $6 billion in new alternative investment fundraising, which highlights growing interest in non-traditional asset classes. Their institutional pipeline is also looking strong, with $18.1 billion in won-but-unfunded mandates, suggesting that more business is coming down the pipeline.
To streamline operations, Franklin is integrating some corporate functions of Western Asset Management. While that might raise some questions, the company has reassured investors that the investment team will continue to operate independently.
Overall, Franklin Templeton’s latest results show that the company is making progress in key areas while facing the same challenges that many asset managers are dealing with. Revenue growth and new investment flows are good signs, but managing outflows and improving profitability will be key going forward.
Financial Health and Stability
For dividend investors, financial strength is just as important as yield. A high yield doesn’t mean much if the company doesn’t have the financial resources to sustain it.
Balance Sheet Highlights
- Total Cash: $2.81 billion
- Total Debt: $3.72 billion
- Debt-to-Equity Ratio: 24.26%
- Current Ratio: 5.36
Franklin has a solid cash position, which helps offset some of the concerns around its high payout ratio. The company’s debt levels are relatively low, and with a current ratio of 5.36, it has plenty of liquidity to meet its short-term obligations.
Profitability Metrics
- Profit Margin: 4.32%
- Operating Margin: 14.85%
- Return on Equity (ROE): 4.02%
Profit margins are on the lower side for an asset management firm, which typically enjoys strong profitability. A year-over-year earnings decline of 34.9% is another red flag, suggesting that the company is facing headwinds that could impact its ability to maintain current dividend levels.
Valuation and Stock Performance
Franklin Resources trades at a forward price-to-earnings (P/E) ratio of 9.82, which is relatively low compared to historical averages. The price-to-book ratio of 0.86 suggests that the stock is trading at a discount to its net assets. This could mean that the market is undervaluing the company, or it could reflect concerns about its future growth prospects.
Stock Performance at a Glance
- 52-Week High: $28.61
- 52-Week Low: $18.83
- Current Price: $20.32
- 200-Day Moving Average: $21.28
The stock has been trending below its 200-day moving average, which signals that investors have been cautious. Franklin’s share price has underperformed the broader market, down 28.45% from its 52-week high.
Despite this, if earnings can recover, the valuation could start to look more attractive. The company’s enterprise value to EBITDA ratio of 14.22 is a bit on the high side, suggesting that the stock isn’t dirt cheap, but it’s not excessively expensive either.
Risks and Considerations
Every dividend stock comes with risks, and Franklin Resources is no exception. Here are some of the key factors investors should be aware of:
Dividend Sustainability
The biggest concern right now is whether the company can continue paying its current dividend. A payout ratio of nearly 200% is unsustainable, and unless earnings rebound, a dividend cut could be on the table in the next few years.
Industry Headwinds
The traditional mutual fund industry has been losing market share to low-cost ETFs and index funds. Franklin has been diversifying into alternative investments, but competition remains tough. If the company can’t adapt to changing investor preferences, revenue growth could remain sluggish.
Earnings Decline
Quarterly earnings dropped nearly 35% year-over-year. If this trend continues, it could put further pressure on the dividend and stock price.
Market Volatility
With a beta of 1.45, Franklin Resources is more volatile than the overall market. That means investors should expect price swings, which could be a concern for those looking for a stable, low-risk dividend play.
Final Thoughts
Franklin Resources has a long history of rewarding shareholders with dividends, and its 6.3% yield is hard to ignore. For income investors, that kind of payout is always worth a closer look.
However, the biggest question is whether the company can sustain its current dividend level. With a payout ratio exceeding 195% and earnings declining, Franklin will need a turnaround in profitability to avoid a potential dividend cut.
The company does have some positives, including strong cash reserves, low debt, and a long history of shareholder returns. But with the asset management industry facing structural shifts and Franklin’s earnings under pressure, investors need to weigh the risks carefully.
For those focused on dividends, keeping an eye on future earnings reports will be crucial. If Franklin Resources can stabilize its profitability, it may continue to be a reliable income stock. But if earnings remain weak, adjustments to the dividend could be on the horizon.
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