Yahoo Finance Should You Buy T. Rowe Price (TROW) for 4.25% Dividend Yield?
Investors seeking attractive dividend yields amid the current uncertain macroeconomic environment can consider T. Rowe Price Group, Inc. TROW, a fundamentally solid investment manager.
T. Rowe Price is a global investment management organization that provides a broad array of mutual funds, sub-advisory services and separate account management for individual and institutional investors, retirement plans, and financial intermediaries. The company has hiked quarterly dividends every year since its IPO in 1986, the most recent being a sequential hike of 1.6% in January 2024 to $1.24 per share.
In the past five years, TROW raised its dividend five times, with an annualized dividend growth rate of 11.8%. Considering the last day’s closing price of $117.13, the company’s dividend yield currently stands at 4.25%. This is impressive compared with the industry’s average of 1.89% and attractive for investors as it represents a steady income stream.
T. Rowe Price Group, Inc. Dividend Yield (TTM)
T. Rowe Price Group, Inc. dividend-yield-ttm | T. Rowe Price Group, Inc. Quote
Should one keep an eye on the TROW stock to earn a high dividend yield? Let us check the company's financials to understand the risks and rewards before making any decision.
In 2020, the board of directors increased the common share repurchase authorization by 10 million shares, bringing the total authorization to 22.4 million shares. In first-quarter 2024, TROW returned $365 million to shareholders in the forms of dividends and share buybacks.
T. Rowe Price exhibits a strong liquidity position. It had liquid assets (including cash and cash equivalents, as well as investments) of $5 billion compared with total liabilities of $2.18 billion as of Mar 31, 2024. A higher level of liquid assets in the company aids in impressive capital distribution activities. Given its solid liquidity position and a favorable debt/equity position compared with the industry average, such capital distributions seem sustainable.
TROW has been witnessing solid top-line growth over the past several years. Net revenues saw a four-year (ended 2023) compound annual growth rate (CAGR) of 3.6%, with the rising trend continuing in first-quarter 2024. Going forward, the company’s focus on fortifying its business by enhancing investment capabilities, broadening distribution reach and investing in new product offerings will support revenue growth.
In September 2023, the company launched T. Rowe Price OHA Select Private Credit Fund (OCREDIT) in partnership with OHA to provide private credit investment solutions for income-oriented individual investors. The mix shift toward international growth funds is also expected to help increase revenues and the investment management margin of the company.
T. Rowe Price’s diverse business model ensures sustainable earnings. Accordingly, the company’s diversified AUM across various asset classes, client base and geographies offers support. Its AUM balance witnessed a CAGR of 4.6% over the past four years (2019-2023), with the rising trend continuing in first-quarter 2024. A strong brand, consistent investment track record and decent business volumes are expected to keep supporting AUM growth in the upcoming period.
In the past three months, shares of this Zacks Rank #1 (Strong Buy) company have gained 5.6% compared with the industry’s rally of 2.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Therefore, investors should consider adding this stock to their portfolio as this will help generate robust returns over time.
Other Companies With Solid Dividends
Major regional banking stocks like Truist Financial TFC and Comerica CMA are worth a look, as these, too, have decent dividend yields.
Considering the last day’s closing price, Truist Financial’s dividend yield currently stands at 5.20%. It currently carries a Zacks Rank of 3 (Hold).
Based on the last day’s closing price, Comerica’s dividend yield currently stands at 5.18%. It carries a Zacks Rank of 3 at present.
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T. Rowe Price Group, Inc. (TROW) : Free Stock Analysis Report
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