T. Rowe Price Group Inc. operates one of the largest no-load mutual fund complexes in the United States.
TROW is well-positioned as an asset manager with a strong market share and a well-respected brand. It consistently produces net client inflows based on the relative performance of its funds (nearly 90% of its funds are in the top half of their categories on a five-year performance basis). When considering TROW as a possible buy, my concerns are three-fold. First, the yield at 2.18% is below my current 2.5% minimum. Secondly, its current valuation is 28% above my calculated buy price of $38.74. However, my greatest concern are the dividend fundamentals. The 15% dividend growth rate used in this valuation is driven off a strong past – the company averaged 17.4% between 2001 and 2008, but only averaged 6.1% in 2009 and 2010. For now, I will pass on TROW.
Source: Dividends Value
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