10 Dividend Trap Stocks to Avoid in 2025

4. Franklin Resources, Inc. (NYSE:BEN)

Performance: -31.89%

Dividend Yield: 7.31%

Payout Ratio: 195.31%

Franklin Resources, Inc. (NYSE:BEN), also known as Franklin Templeton, is a global investment management firm. Running its operations from California, the company offers mutual funds, ETFs, and institutional asset management services, catering to retail investors, sovereign funds, and pension plans. The company competes with strong competitors like BlackRock and T. Rowe Price by differentiating itself through multi-boutique investment strategies. The company follows an acquisition strategy alongside diversification across asset classes to improve its growth.

Franklin Resources, Inc. (NYSE:BEN)’s performance declined by 31.89% in the last 1 year, leading to concerns among shareholders. In 2024, the company lost around $49 billion in outflows because of the investigation conducted on Western Asset Management, a part of Franklin Resources, Inc. (NYSE:BEN) by the DOJ, SEC, and CFTC. The higher tax rate, combined with a decline in operating income, has reduced the adjusted net income by 4% and the adjusted diluted EPS by 8%. The ongoing investigations and the resulting outflows at Western Asset Management together have exposed the financial performance of the company to uncertainty and potential volatility.

Despite offering a compelling 7.31% dividend yield, Franklin Resources, Inc. (NYSE:BEN) remains one of the worst dividend stocks because of the ballooning payout ratio of 195.31%, which raises questions regarding the company’s sustainability of returns.