Franklin Resources (BEN) increased its dividend by a hefty 20% last week, continuing its dividend growth streak dating back to 1981.

This dividend aristocrat has recently fallen on hard times, causing its stock price to drop by 37% over the last year. BEN’s stock now has a dividend yield twice as high as its five-year average yield, and it trades for a forward earnings multiple of just 12.6x.

Let’s take a closer look at the business, which has several notable strengths despite the fall in its stock price.

Business Overview

Franklin Resources is a global investment management firm with more than $725 billion in assets under management as of 1/31/16. It provides equity, fixed income, alternative, and custom solutions to a mix of retail (76% of assets) and institutional (24%) clients located in over 180 countries. Some of its largest funds include the Templeton Global Bond Fund and the Franklin Income Fund.

Most of its products are open-end mutual funds, and the company primarily makes money by charging a fee based on a percentage of the total market value of the assets it manages.

By asset type, approximately 40% of the company’s assets under management are in equity products, 42% in fixed income, and 18% in hybrid investments. Franklin Resources’ U.S. funds accounted for roughly 67% of its assets in fiscal year 2015.

Business Analysis

As one of the largest investment managers in the world and with an operating history dating back more than 65 years, Franklin Resources has built up significant brand value in the industry. The company has been partnering with financial advisors and brokers for distribution of its products since the late 1940s, resulting in thousands of long-lasting relationships that are advocates of its funds.

The majority of Franklin Resources’ funds have also ranked in the top-half of their peer groups over the last 3-, 5-, and 10-year periods, helping the company significantly expand its asset base over time. The firm has a particularly strong track record in the fixed income business and is also well diversified by product type and geography, adding to its moat and durability.

As one of the largest players in the industry, Franklin Resources is also able to spread its costs over a larger pool of clients to keep its costs competitive and gain economies of scale. The asset management business mostly requires people and computers, which further boosts the company’s cash flows given the little amount of capital required to run the business.

Asset managers also benefit from recurring revenue and the long term trajectory of financial markets. Clients pay asset managers a fee each year to invest their money, and most will stay with a fund manager for multiple years. Many retail investors will even set an asset allocation plan and never touch it, giving companies such as Franklin Resources a long stream of revenue.