Continuing with the trend of increasing dividend annually since 2010, global asset management firm Legg Mason Inc. (LM) declared a 23.1% hike in its quarterly cash dividend to 16 cents per share. The new dividend will be paid on Jul 14 to shareholders of record as of Jun 17. Though the revelation is not a surprise, it definitely adds to investors’ optimism.
Legg Mason has a record of consistently paying regular quarterly dividend. Even during the financial crisis, the company did not discontinue dividend payment though slashed the value per share from 24 cents to 3 cents in 2009. However, along with the revival of its performance since 2010, the company has been making efforts to enhance stockholder value through efficient capital deployment activities.
Notably, in the first nine months of fiscal 2014, the company repurchased shares worth about $270.0 million and paid $46.3 million through dividends. Further, driven by a sound liquidity position, Legg Mason has been able to undertake strategic acquisitions in the past couple of years. Recently, the company announced its decision to acquire New York-based private asset manager QS Investors to expand its global investment products portfolio. We expect Legg Mason’s capital generating ability to continue benefiting the company and its shareholders.
These features make Legg Mason a solid income pick. Further, if you are looking to benefit from this earnings season, Legg Mason is the right candidate in the investment management space. This is because, the company has the right combination of elements – Zacks Rank # 3 (Hold) and a positive Earnings ESP – to post for an earnings beat when it reports its fiscal fourth-quarter 2014 results on May 1. Needless to say, an earnings beat generally translates to stock price appreciation.
You may also consider some better ranked stocks in this space including Cohen & Steers Inc. (CNS), Lazard Ltd. (LAZ) and Affiliated Managers Group Inc. (AMG). While both Cohen & Steers and Lazard hold a Zacks Rank #1 (Strong Buy), Affiliated Managers carries a Zacks Rank #2 (Strong Buy).
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