Wednesday, January 28, 2015

Recent Buy - T. Rowe Price Group Inc. (TROW)

Hi Everyone,

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.
TROW Chart:


Statistics:

P/E:  18
Yield:  2.21%
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?


11 comments:

  1. ADD,

    Great buy. I love TROW. One of my favorite stocks in this space. Hope to join you as a shareholder at some point this year. I took a good look at it a few months ago and the historical performance was incredible.

    Nice job getting in before the ex-dividend date and raise. :)

    Best regards.

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    Replies
    1. Thanks DM. I did quick research on a few companies and this one just stood out from the rest. Gotta love no debt, buybacks and great dividend growth. I waited until after earnings which was basically in-line with estimates and the stock fell $2. I figured I would pull the trigger. I can always buy more at a cheaper price but why wait?

      Thanks for stopping by.

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  2. Tremendously well run company with a culture of promoting from within. They've been on the watchlist for a while and it is just a matter of pulling the trigger at this point.

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    Replies
    1. Well, you've got the opportunity to get in at a better price than I so pull the trigger! haha

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  3. ADD,

    Great pick up! The dividend growth rate on T Rowe is phenomenal and will push that yield on cost up a long ways when you hold it in your portfolio. Let the dividends begin rolling from it, great purchase and investment, congrats!

    -Lanny

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    Replies
    1. You got it! Investing for the long term I can't wait to see the growth curve really accelerate in 10 - 15 years. Lets just hope they keep up the great growth rate. Thanks

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  4. TROW is a solid pick form many perspectives. Decent PE, yield and great dividend growth rate with many years under its belt. Don't beat yourself up about the MSFT buy as well. Many times earnings reports and stock price movement is not always rational. Just when you expect and up day it goes down and vice versa. When investing for the long term these short term fluctuations won't matter much. Thanks for sharing.

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    Replies
    1. Yea, there is a lot to like about TROW and I look forward to reaping those benefits in the years to come. MSFT had a good quarter too so most likely it will come back and in the meantime, the dividends they pay me will be reinvested at a cheaper price.

      Thanks for stopping by DivHut

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  5. Excellent buy, I've been looking at TROW for a while now but haven't pulled the trigger yet.

    ReplyDelete
    Replies
    1. Now is as good as any time! Come be a fellow shareholder with me and reap the benefits sooner rather than later. I've been hearing it a lot that people just havent been able to pull the trigger with this company so perhaps the next pullback I'll have some friends.

      Thanks for posting Tawcan.

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