T. Rowe Price Group Inc (NASDAQ:TROW) was founded in 1937. Today, the company has a market cap of $16.3 billion and manages over $700 billion in assets.
The company provides mutual funds, advisory services, and separately managed accounts for individuals, institutional investors, retirement plans, and financial intermediaries.
This article analyzes T. Rowe Price Group’s dividend, competitive advantage, total return potential, valuation, and recession performance in the sections below…
Out of some 730 funds tracked by Insider Monkey, 26 reported long positions in T. Rowe Price Group with a total value of $516.24 million as of the end of September. During the third quarter, the number of funds bullish on the stock fell by 3, but the aggregate value of their holdings advanced from $400.66 million. Among the funds bullish on TROW are John W. Rogers’ Ariel Investments, David Harding’s Winton Capital Management, and David Blood and Al Gore’s Generation Investment Management.
T. Rowe Price Group has paid increasing dividends for 29 consecutive years. The company’s latest dividend increase (in February of 2015) was for 18.2%.
The image below shows T. Rowe Price Group’s dividend history since 1989:
This dividend history does not include special dividends. In 2015, T. Rowe Price Group paid a special dividend of $2.00 per share. This move highlights the shareholder friendly nature of T. Rowe Price Group’s management.
T. Rowe Price Group currently has a dividend yield of 3.2% and a payout ratio of 46%. The company’s above average yield and fairly conservative payout ratio bode well for both current income and potential future dividend increases.
The company’s historical dividend yield is shown in the image below:
As you can see, now is historically the best time to buy T. Rowe Price Group stock (based on its dividend yield) since the Great Recession. T. Rowe Price Group stock has only traded for a dividend yield above 3% in the early nineties, briefly in 2002, and during the Great Recession.
T. Rowe’s competitive advantage comes from its trusted name in the mutual fund industry. The company generates the majority of its earnings from mutual fund fees.
As a result, outperformance compared to its peers is critical for the company to continue marketing its mutual funds.
The company has outperformed its peers based on Lipper mutual fund averages. The percentage of the company’s mutual funds that have outperformed over various time frames is shown below:
– 1 Year: 71%
– 5 Year: 77%
– 10 Year: 88%
The company’s competitive mutual fund products have helped it reach its massive scale. T. Rowe Price Group’s investing know-how combined with their well-known brand form the company’s competitive advantage.