T. Rowe Price Group, Inc.
) board of directors approved a 12% hike in the company's
quarterly common stock dividend. The revised quarterly dividend
now stands at 38 cents per share compared with the previous
amount of 34 cents. The revised dividend will be payable on Mar
27, 2013, to shareholders of record as of Mar 13.
This marks 27th consecutive annual dividend increase for this
investment manager, reflecting its commitment to return value to
shareholders with its strong cash generation capabilities. Prior
to this hike, the company had increased its dividend by 10% (from
31 cents to 34 cents per share) in Mar 2012.
We believe that despite active competition, the company has a
significant long-term upside potential based on its disciplined
risk-aware investment approach, which focuses on diversification,
style consistency and fundamental research.
As of Dec 31, 2012, T. Rowe Price remains debt-free with
substantial liquidity, including cash and sponsored portfolio
investment holdings of about $2.0 billion, which supports its
ability to continue investing in the future. The company had
$948.4 million in operating cash flows as of Dec 31, 2012.
Further, during 2012, the company repurchased 2.3 million shares
of its common stock for $135.2 million.
T. Rowe Price's fundamentals remain strong with a debt-free
position, higher return on earnings and improving investor
sentiment. Further, relative mutual fund performance was
positive. We believe that in the long run, the company's
financial stability will help it gaining traction in the economy
and benefit from the growth opportunities in the domestic and
global assets under management (AUM).
Moreover, the dividend increase will boost shareholders'
confidence in the company.
Currently, T. Rowe Price carries a Zacks Rank #3 (Hold). Asset
managers that are performing well include,
Virtus Investment Partners, Inc.
WisdomTree Investments, Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
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