T. Rowe Price Rewards Investors With 18.4% Dividend Hike
Zacks Investment Research | Feb 12, 2020 09:13PM ET
T. Rowe Price Group, Inc.’s (NASDAQ:TROW) board of directors recently approved an 18.4% hike in the company’s quarterly common stock dividend. The revised quarterly dividend now comes in at 90 cents per share compared with the previous figure of 76 cents. The dividend will be paid on Mar 30, to shareholders of record as of Mar 16, 2020.
This marks the 34th consecutive annual dividend raise for this investment manager, reflecting its commitment to return value to shareholders with solid cash-generation capabilities. Prior to this hike, the company had increased its dividend by 8.6% (from 70 cents to 76 cents per share) last February.
We believe despite intense competition, the company has a significant long-term upside potential based on its disciplined risk-aware investment approach, which focuses on diversification, style consistency and fundamental research.
As of Dec 31, 2019, T. Rowe Price remains debt free with substantial liquidity, including cash and sponsored portfolio-investment holdings of about $5.6 billion, which supports its ability to continue investing in the future. In addition, T. Rowe Price invested $204.6 million in capitalized technology and facilities using available cash balances during 2019.
Notably, for 2020, the company projects capital expenditures at approximately $210 million, comprising three-fourth for technology development.
T. Rowe Price also recently announced preliminary AUM of $1.21 trillion for January 2020. Results reflect a marginal rise from Dec 31, 2019. Client transfers from mutual funds to other portfolios, including trusts and separate accounts, were $2.8 billion in the month.
Considering last day’s closing price of $138.48 per share, the dividend yield is currently valued at 2.6%.
Investors interested in this Zacks Rank #1 (Strong Buy) stock can have a look at this asset manager’s fundamentals and growth opportunities.
Revenue Growth: T. Rowe Price’s net revenues indicate compounded annual growth rate (CAGR) of 7.5% over the last five years (2015-2019). Additionally, the company remains focused on fortifying business through several planned initiatives, and improving its technology platform and deriving long-term cost efficiencies.
Earnings Strength: T. Rowe Price recorded an earnings growth rate of 14.6% over the last three to five years. Furthermore, the expected long-term EPS growth is likely to be 9.77%. Also, the company recorded an average positive earnings surprise of 8.17% over the trailing four quarters.
Leverage: T. Rowe Price’s debt/equity ratio is 0.02 compared with the industry average of 0.25.
Superior Return on Equity (ROE): T. Rowe Price’s ROE of 29.45%, as compared with the industry average of 14.03%, highlights the company’s commendable position over its peers.
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Share Price Movement: T. Rowe Price’s shares have gained 31.4% over the last six months compared with 26% growth registered by the Zacks Investment Research
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