T. Rowe Price Looks To Extend Dividend-Hikes Streak

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In recent years,T. Rowe Price Group ( TROW ) has announced its dividend increases in February.

Whether investors see a dividend increase next month or not, the odds are good that an increase will come sometime this year.

The financial manager and adviser is in the S&P 500 Dividend Aristocrats index. Making the list takes 25 consecutive years of dividend increases. Through 2012, T. Rowe was at the 26-year mark.

Recent dividend increases have been generous -- 8% in 2010, 14.8% in 2011 and 9.7% last year.

In December, the company paid a special dividend of $1 a share. When the special dividend was announced, CEO James A.C. Kennedy said the special dividend "should not impact the company's ability to continue our outstanding dividend record."

T. Rowe Price's earnings have been on the rebound.

After recession-related earnings declines in 2008-'09, earnings grew 45% in 2010, 15% in 2011 and are expected to have grown 16% in 2012. The results for 2012 will be released Jan. 29.

The five-year earnings Stability Factor is 20 on a gauge that runs from 0 (calm) to 99 (wild).

Revenue increased 26% and 16% in 2010-'11. The Street expects about 11% in 2012.

The company is without debt, yet return on equity was about 23% last year. Debt artificially increases ROE, so 23% is a very good percentage. Top stocks generally have an ROE of 17% or higher.

After-tax margin was about 32% in Q3, the highest in at least 17 quarters.

The industry group also is fairly strong. As of Wednesday's IBD, the Finance-Investment Management industry group was No. 34 among 197 groups.

Clients outside the U.S. account for about 10% of assets under management.

Risk factors include government regulation, which can and does impose costs. In recent years, the industry has had to deal with Sarbanes-Oxley, Dodd-Frank and the Volcker Rule. The Volcker Rule could push T. Rowe to dump its savings bank subsidiary. However, T. Rowe says that such a move wouldn't be material to operations.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: TROW

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