Get 4.3% from T. Rowe Price

Concerns over high interest rates and their impact on loan demand and writeoffs have hindered the shares of the big banks. That’s partly why we recommend investors diversify their holdings with non-bank companies like T. Rowe Price that serve niche segments of the finance industry.

Assets under management are $1.45 trillion at this firm, making it a serious player with great prospects and plenty of cash flow the support the high dividend yield.

The stock is also cheap and trades at 14.8 times the company’s 2024 earnings forecast.

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T. ROWE PRICE GROUP INC. (Nasdaq symbol TROW; www.troweprice.com) provides financial advice and products to individuals and institutions worldwide.

The company’s fee income rises and falls with the value of the mutual funds and other securities it manages.

Thanks to rising stock markets, assets under management rose 0.3% to $1.45 trillion as of January 31, 2024 since the end of 2023. That offset a net outflow in the month of $4.8 billion.

T. Rowe Price also continues to benefit from its December 2021 acquisition of Oak Hill Advisors for $3.4 billion. That firm arranges financing for distressed businesses unable to secure loans from traditional lenders.

Dividend Stocks: T. Rowe Price is a financial beacon amid banking sector uncertainty

The company’s long-term prospects remain bright, particularly as more baby boomers retire over the next few years. To better serve those clients, it recently paid an undisclosed amount for Retiree, Inc. Based in Kansas, this firm makes retirement income planning software. Those products help clients who have retired or are approaching retirement create personalized wealth management plans.

A new plan to cut 2% of its workforce and consolidate office space should also improve T. Rowe Price’s profitability.

Investors can expect T. Rowe Price to earn $7.84 a share in 2024, and the stock trades at an attractive 14.8 times that forecast.

As well, with the March 2024 payment, the company will raise your quarterly dividend by 1.6%, to $1.24 a share from $1.22. The new annual rate of $4.96 yields a high 4.3%.

With this latest increase, T. Rowe Price has now raised its dividend each year for the past 38 years. Over the past five years, that dividend rose by an average 10.3% annually. The company’s TSI Dividend Sustainability Rating is Above Average.

Recommendation in Dividend Advisor: T. Rowe Price Group Inc. is a buy.

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Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

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