Back to top

Image: Bigstock

T. Rowe Price (TROW) Rewards Investors With Special Dividend

Read MoreHide Full Article

T. Rowe Price Group, Inc. (TROW - Free Report) has announced a special dividend of $3 per share. The dividend will be paid on Jul 7, to shareholders of record as of Jun 25, 2021.

In fact, the investment management company had last paid a special cash dividend in 2015.

The company's chair and CEO, William J. Stromberg, commented, "This special cash dividend is an efficient return of capital to our stockholders and reflects the healthy cash position on our balance sheet. After the special dividend payment, the company's balance sheet will remain very strong, with ample liquidity to continue to execute on our business strategy. In addition, we believe that the payment of the special cash dividend will not have a material impact on the company's ability to meet its ongoing financial needs, continue our outstanding dividend record for the foreseeable future, or maintain a buffer against market volatility."

T. Rowe Price has been consistently enhancing shareholders’ value through solid capital-deployment activities. This February, the company hiked its quarterly common stock dividend by 20% to $1.08 per share, marking the 35th consecutive annual dividend increase. Based on last day’s closing price of $22.77, the company’s dividend yield currently stands at 18.97%. This yield is not only attractive for income investors but also represents a steady income stream.

Besides, in February 2020, its board of directors increased the common share repurchase authorization by 10 million shares, bringing the total authorization to 22.4 million shares. In the first quarter of 2021, the company’s stock repurchases amounted to $267.6 million. This reflects T. Rowe Price’s strong cash-generation capabilities.

T. Rowe Price’s capital-deployment activities are backed by its solid liquidity position. The company remains debt free with substantial liquidity that includes cash and sponsored portfolio investment holdings of $6.86 billion, as of Mar 31, 2021. This has aided in strengthening the company’s capital leverage and generating a return on earnings that is substantially higher than the industry average. These growth drivers also pave the way for an industry-leading dividend yield, thereby creating ample investor confidence and scope for investment and growth opportunities in the future.

Investors interested in this Zacks Rank #3 (Hold) stock can have a look at the asset manager’s fundamentals and growth opportunities before making any investment decision. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

T. Rowe Price’s net revenues saw a compounded annual growth rate (CAGR) of 9.7% over the last five years (2016-2020). Additionally, the company remains focused on fortifying business through several planned initiatives, and improving its technology platform and deriving long-term cost efficiencies.

Further, the company has recorded earnings growth rate of 19.39% over the last three to five years. Its expected long-term EPS growth is 12.7%. T. Rowe Price’s ROE of 33.97% compared with the industry average of 15.46% highlights its commendable position over peers.

T. Rowe Price’s shares have gained 18.8% over the last six months compared with 26.1% growth registered by the industry.

Zacks Investment ResearchImage Source: Zacks Investment Research

Other Key Picks

Some other top-ranked stocks in the finance space are Ameriprise Financial, Inc. (AMP - Free Report) , The Blackstone Group Inc. (BX - Free Report) , carrying a Zacks Rank #2, and Sprott Inc. (SII - Free Report) , sporting a Zacks Rank #1, at present.

The Zacks Consensus Estimate for Ameriprise has moved up 7.3% for the current year’s earnings in the past 60 days. The company’s share price has gained 34.2% in the past six months.

Blackstone has witnessed a 10.9% upward revision in the ongoing year’s earnings estimate over the past 60 days. Its share price has rallied 47.3% in the past six months.

Sprott’s shares have gained 42.6% in six months’ time. The 2021 earnings estimate has moved 19.5% north in the past 60 days.

Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>