SEI Investments Co. SEIC raised its semi-annual dividend by 8% to 26 cents per share from the prior payout of 24 cents. Concurrently, the company’s board approved a $100 million increase in its share repurchase authorization, thereby taking the total authorization level to $153 million.
The latest hike marks the fifth consecutive dividend increase by the company; and the stock now has an annualized yield of 0.98%. Though this is considerably below the industry average of 3%, the company continues to utilize excess capital to fund business investments.
The company continues to deploy resources into its SEI Wealth Platform, through which it delivers investment processing solutions. Since its inception in 2007, the company has signed deals with 20 independent wealth advisors in the U.K and 10 banks in the U.S. In 2014, the company converted two client tranches and intends to convert a larger tranche by the end of 2015.
Moreover, in Jul 2015, the company extended its long-term affiliation with Well Fargo Bank, National Association; and is currently working on the projects in the pipeline. At the same time, the company continues to make investments to ramp up operations across every business segment.
These investments have helped the company to grow revenues at a five-year compounded annual growth rate of 8.9% (2010−2014). Though the company is projected to witness revenue growth of 5.5% in 2015, it is expected to remain flat for the industry. Additionally, the projected earnings per share growth rate is currently 4.3% for SEI Investment as against negative 2.8% for the industry.
As a result, we remain optimistic about the company’s prospects and hence, expect the dividend increase to boost investor confidence.
SEI Investment currently carries a Zacks Rank #3 (Hold). Some better-ranked investment managers are Woori Bank Co., Ltd. WF, Federated Investors, Inc. FII and AllianceBernstein Holding L.P. AB. All these stocks hold a Zacks Rank #2 (Buy).
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