Once again, January continues to be a busy month in terms of buying companies for the American Dividend Dream portfolio. I went through my portfolio and noticed that it was lacking an investment management company. I looked around at a few different such companies and was about to pull the trigger but realized their earnings report was just around the corner. As you can see from one of my recent purchases MSFT I should have waited until after the earnings report. Lesson learned and a costly one at that but oh well, I try not to time the market that much and the cash I have is burning a hole in my pocket. Had MSFT killed earnings, I could post how well that buy was. I waited until after the earnings report for TROW and liked what I saw so I bought it today, Without further adieu...
I purchased 25 shares of T. Rowe Price (TROW) at $79.75. This purchase adds $44.00 of annual dividends to my account.
I now own 25 shares of T. Rowe Price as this was a new purchase which means I have 31 individual companies that I am invested in. I may add to this position in the future, or I might buy an equal position of Eaton Vance (EV), Waddell Reed (WDR) or Legg Mason (LM) to round out my investment company portion of my portfolio. Forward dividends now stand at around $3,573 for the next 12 months. I just happened to get T. Rowe before the ex-dividend date so I will not miss any of their payouts! Another added bonus is that they usually increase the dividend in February and I am expecting .06 cent raise to .50 which means I'd expect $50 of dividends from TROW. More on the details below. The portfolio will be updated to reflect this purchase.
From Google Finance: T. Rowe Price Group, Inc. is a financial services holding company, which provides global investment management services through its subsidiaries to individual and institutional investors in the sponsored T. Rowe Price mutual funds and other investment portfolios, including separately managed accounts, sub-advised funds, and other sponsored investment funds offered to investors outside the United States and through variable annuity life insurance plans in the United States. The Company derives revenue from investment advisory services provided by its subsidiaries, such as T. Rowe Price Associates, Inc. and T. Rowe Price International Ltd. Its revenues depend on the total value and composition of assets under its management. Its assets under management are accumulated from a client base across four distribution channels. Effective August 20, 2013, T Rowe Price Group Inc acquired an undisclosed interest in GrubHub Inc, a provider of online food delivery services.
Market Cap: 21B
Dividend Growth Rate (10yr avg): 15%
Payout Ratio: 39%
Years of Dividend Growth: 28 years
As you can see from the numbers above, TROW is one company that has its act together. The PE ratio is roughly the same as the overall market, the yield is average and whats not to love about the dividend aspects of this company. Payout ratio is low, the growth rate is well above average and they have been growing this dividend for 28 years! Current dividend stands at .44 cents per quarter buy I expect this to be raised to .50 cents per quarter next month. A 13.5% raise which is right in line with what they have been increasing the dividend by. But, that's not the best part... Best part is NO DEBT! How many companies these days with the low interest rate environment can claim that they have no debt? To go along with great dividend history and no debt, TROW also has a pretty substantial buyback in place. What is there not to love about this stock!? In December 2014, their buyback was increased 15M shares which at the time resulted in 20.9M shares allowed to be bought back. With a total float of 260M shares, that's good for roughly 8% of the company.
So there you have it, the next building block on the path to the American Dividend Dream! What do you think, good purchase, bad purchase? What are you looking to buy next?