T. Rowe Price Group, Inc.’s TROW board of directors recently approved an 8.6% hike in the company’s quarterly common stock dividend. The revised quarterly dividend now comes in at 76 cents per share compared with the previous figure of 70 cents. The dividend will be paid on Mar 29, to shareholders of record as of Mar 15, 2019.
This marks the 33rd 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 23% (from 57 cents to 70 cents per share) in February 2018.
Further, T. Rowe Price’s board of directors increased the common share repurchase authorization by 10 million shares, bringing the total authorization to about 22.4 million shares.
We believe despite active 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, 2018, T. Rowe Price remains debt free with substantial liquidity, including cash and sponsored portfolio-investment holdings of about $4.5 billion, which supports its ability to continue investing in the future. Moreover, the company has $962.3 billion in assets under management as of Dec 31, 2018.
In addition, during 2018, T. Rowe Price invested $168.5 million in capitalized technology and facilities using available cash balances.
Notably, the board announced that William J. Stromberg, existing president and CEO of the company, will also chair the Board, effective Apr 25, 2019. This will be subsequent to the retirement of the current non-executive chairman Brian C. Rogers.
Recently, T. Rowe Price announced preliminary AUM of $1.04 trillion for January 2019. Results reflect nearly 8% rise from $962 billion recorded on Dec 31, 2018. Client transfers from mutual funds to other portfolios, including trusts and separate accounts, were $2.7 billion this January.
Considering last day’s closing price of $98.13 per share, the dividend yield is currently valued at 3.1%.
Investors interested in this Zacks Rank #3 (Hold) 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 7.8% over the last five years (2014-2018). 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 earnings growth rate of 10.4% over the last three to five years. Furthermore, the expected long-term EPS growth is likely to be 9.66%. Also, the company recorded average positive earnings surprise of 0.08% over the trailing four quarters.
Leverage: T. Rowe Price’s debt/equity ratio is nil compared with the industry average of 0.19.
Superior Return on Equity (ROE): T. Rowe Price’s ROE of 29.12%, as compared with the industry average of 13.54%, highlights the company’s commendable position over its peers.
Share Price Movement: T. Rowe Price’s shares have gained 2.1% over the last three months compared with 2.4% growth in the industry.
Some other finance stocks which raised their dividends during the current quarter include Northern Trust Corporation NTRS, Washington Federal, Inc. WAFD and Wintrust Financial Corporation WTFC. Northern Trust raised its quarterly dividend by 9%, while Wintrust Financial increased by 31.6%. Also, Washington Federal has announced an 11.1% hike in its common stock dividend.
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