Summary
- T. Rowe Price is a Dividend Aristocrat, consistently increasing its dividend annually for over 25 years, offering a yield of 4.76%.
- The firm boasts a robust profit margin of around 28%, significantly higher than competitors like Bank of America and Franklin Resources.
- The shift from defined benefit pension plans to defined contribution plans like 401k increases reliance on the stock market, benefiting firms like T. Rowe Price.
- Institutional investors hold nearly 75% of T. Rowe Price stock, reflecting strong confidence in its continued growth and stability.
It was not that long ago that Baltimore, Maryland, as is often the case for a port city, was a major financial center with Maryland National Bank in commercial banking, Alex Brown in investment banking, Legg Mason in securities, and T. Rowe Price (NASDAQ:TROW), a leader in personal finance.
Each had their own specialty. Maryland National had a lucrative credit card operation. Alex Brown, the first investment bank in the United States, financed many hi-tech concerns. T. Rowe Price has a large family of eponymously named mutual funds. For various reasons, many were bought by larger financial institutions. Maryland National Bank was acquired by Bank of America (BAC). Alex Brown was bought out by Bankers Trust, now Deutsche Bank (DB). Franklin Resources (BEN) purchased Legg Mason. Founded in 1937 and still independent, T. Rowe Price has stood the test of time, and should continue to reward shareholders for three factors.
The first is the commitment of T. Rowe Price to share its earnings with its stockholders, as evinced by the fact that it is a Dividend Aristocrat. That is a publicly traded company that has increased its dividend payment annually for more than 25 years. Long story short: just by buying and not selling the stock, shareholders of T. Rowe Price get a raise every year, since it is a Dividend Aristocrat! Even during the last four recessions, the amount of the dividend has been raised. A special dividend has been paid twice in the last decade. Sometimes the amount of the increase is higher than other years, but the commitment to pay and increase the dividend for its shareholders towers above T. Rowe Price in its being honored as a Dividend Aristocrat!
