T. Rowe Price: Dividends, Value & Trust

Focus: FINANCIALS

Ian Wyatt Image Ian Wyatt Publisher & Chief Investment Strategist, Wyatt Investment Research

The numbers matter, of course. They always do. But reputation matter, as well. With financial stocks, you can argue persuasively that reputation matters more than the number, observes Ian Wyatt, editor of High Yield Wealth.

Few financial companies are more deserving of their customers’ and investors’ trust than T. Rowe Price (TROW), the large Baltimore-based mutual-fund company founded in 1937. 

T. Rowe Price has earned the trust of income investors. It has paid a dividend every year since it went public in 1986. The dividend has been increased every one of those years.  

No-load mutual funds are T. Rowe Price's principal product offering. The company offers 127 of these funds, which cover an array of investment styles, instruments, and sectors. T. Rowe Price has certainly earned a lot of customers’ trust. Assets under management (AUM) exceeds $861 billion.

Eighty-four percent of T. Rowe Price’s mutual funds have outperformed their Lipper averages (a benchmark) on total return over three years, 80% over the past five years, and 86% over the past 10 years.

EPS has grown at a respectable 7.9% average annual rate since 2007. The dividend — currently yielding 3.2% — has grown at an even more respectable rate, 12.5% annually.

The balance sheet is as conservative as it gets for a financial company. T. Rowe Price currently carries $1.6 billion in cash and cash equivalents on its balance sheet, about $6.40 of cash per share, and no long-term debt. 

Why are investors losing interest in a blue-chip financial institution?