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 |
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.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 42 years | 42 years | |
| Yield | 4.05% | 3.35% | 1.82% |
| Payout Ratio | 27.63%1 | 29.95%2 | |
| P/E | 6.761 | 8.942 |
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 |
| % Change | 11% | 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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