Invesco Ltd., owner of the Invesco, Van Kampen and PowerShares funds, raised its quarterly dividend 41 percent after investor deposits and a rally in stock markets helped boost first-quarter profit by 9.2 percent.
Net income increased to $193.9 million, or 43 cents a share, from $177.5 million, or 38 cents, a year earlier, the Atlanta-based firm said in a statement today. Excluding some items, Invesco earned 44 cents a share, matching the average estimate of 18 analysts surveyed by Bloomberg.
“That was a pretty solid dividend increase,” Shannon Stemm, an analyst at Edward Jones & Co. in St. Louis, said in a telephone interview. “I think it’s an indication of a strong future earnings outlook.”
Chief Executive Officer Martin Flanagan has broadened Invesco’s offerings through acquisitions and new products. He has increased assets in index-based investments, including exchange-traded funds, in fixed-income products and in so-called alternative investments, such as commodities and real estate. Assets under management reached a record $673 billion in the quarter, driven by $37 billion in market gains and $8.1 billion in client deposits.
The company rose 2.5 percent to $25.06 in New York. Invesco has risen 25 percent this year, compared with a 17 percent gain for Standard & Poor’s 20-company index of asset managers and custody banks.
Invesco raised its quarterly dividend to 17.25 cents a share from 12.25 cents and repurchased 3.1 million shares in the quarter at a weighted average price of $24.35 a share for a total of $75 million.
Dividends are now “more prominent” among the company’s priorities, Flanagan said in a conference call with analysts. Flanagan also said acquisitions had become less of a focus.
Investors deposited $7.9 billion into Invesco’s passive products in the quarter. Retail clients deposited $7.5 billion into Invesco’s offerings, driven largely by exchange-traded funds and the firm’s asset allocation strategies, Chief Financial Officer Loren M. Starr said in a telephone interview.
The amount of money Invesco manages for clients rose 7.6 percent in the three months ended March 31, as the MSCI ACWI Index of global stock markets increased 11 percent. Equities, which account for about 45 percent of Invesco’s assets, grew by 13 percent in the quarter.
Compared with a year earlier, assets were up 4.8 percent, led by a 23 percent jump for index-based products and unit-investment trusts, and a 11 percent rise in fixed-income assets.
Revenue rose 0.6 percent to $1.03 billion as investment management fees fell 0.1 percent to $791 million. Operating expenses rose 0.3 percent to $803.9 million, driven by a 4.1 percent jump in employee compensation.
Net income was boosted by accounting rules changes that forced Invesco to bring certain investment products, including collateralized loan obligations and some private equity offerings, onto its balance sheet, Starr said. The accounting change increased gains from what Invesco calls non-controlling interests in consolidated entities, which rose 52 percent to $119.1 million.
BlackRock Inc., which also seeks to offer retail and institutional investors a wide array of products, said April 18 that clients withdrew $48 billion during the first quarter. Market gains helped the New York firm increase net income by 0.7 percent to $572 million as assets rose to $3.68 trillion.
“Versus BlackRock, Invesco stacked up quite favorably,” Stemm said. “They seem to be posting more consistent inflows.”
Janus Capital Group Inc. said April 24 that first-quarter net income declined 40 percent to $22.6 million as clients at the Denver-based firm withdrew $2.5 billion. Investors deposited $12.4 billion with Baltimore-based T. Rowe Price, helping to increase profit 1.4 percent to $196.5 million, the company said April 24.