Founded in 1937 and based in Baltimore, Maryland, T. Rowe Price Group Inc (NASDAQ:TROW) is a financial services holding company that provides global investment management services to individual and institutional investors in the sponsored T. Rowe Price mutual funds and other investment portfolios, as well as through variable annuity life insurance plans.
TROW is a Dividend Champion with an impressive 30-year streak of consecutive dividend increases. It pays quarterly dividends of 54¢ per share in the months of January, April, July and October.
I already own 30 shares of TROW, which I bought in March 2015 at an initial yield on cost (YoC) of 2.49%. At $71.39 per share, this buy equates to a YoC of 3.03%.
Adding 35 shares at a lower price reduces my overall cost basis to $76.93 per share. YoC now averages 2.81%. While the yield is not stellar, what interests me most about TROW is the company's healthy dividend growth rate:
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Here is a 5-year price chart indicating my buy prices:
Since my original buy of TROW near the 52-week high, the share price has been drifting lower. Nevertheless, I still like TROW and if it continues to decline, I'll find another opportunity to buy more shares.
Valuation-wise, TROW is trading below fair value based on the following 10-year chart, which plots the share price relative to cash flow (CFL). The CFL growth rate of 8% over the period is solid, though estimates of CFL for the next 2 years are lower.
Morningstar's fair value estimate for TROW is at $77, while S&P Capital IQ has a fair value esimate of $73. Either way, I've purchased shares at a nice discount!
Following is a table containing updated ratings of TROW from various sources:
35 shares of TROW adds $75.60 to DivGro's projected annual dividend income. I've updated my portfolio to reflect this purchase.
What do you think of TROW? Do you own shares or are you interested in buying shares? Let me know your thoughts on TROW below in the comments section. Thanks for reading!