- Meets the financial needs of investors and an aging population wanting to retire
- Revenues and Earnings are growing at over 13% and 15%, respectfully
- Dividends are growing at over 11%
- Total one year gain for owning this stock is estimated to be over 13%
Similarly earnings followed revenues deterioration during this period. Earnings rose through 2007 and then fell in 2008 and 2009. Then, like revenues, they began to accelerate once again in 2010 and have continued to increase through 2013. Estimates for 2014 show an increase in revenues of 13.79% and an increase in earnings of 14.61% and for 2015 show an increase in revenues of 9.59% and an increase in earnings of 11.40%, which is a nice continuation of the company's increasing trends.
Dividends, however, have continued to increase annually throughout the entire period of 2003 to 2013 with one exception in 2012. During that year TROW started out paying a dividend of $0.34 per quarter which would normally produce an annual dividend of $1.36. This is well within the expected increased range of dividend payments for that year. Instead TROW paid a $1.00 special dividend in the 4Q2012 enhancing the dividend payment for that one year.
At the time of the special dividend James A.C. Kennedy, the company's chief executive officer and president, commented: "This special cash dividend is an efficient return of capital to our stockholders. After the special dividend payment, the company's balance sheet will remain strong, with cash and mutual fund investment holdings of nearly $2 billion, and no corporate debt. Further, we believe that the payment of the special cash dividend should not impact the company's ability to continue our outstanding dividend record for the foreseeable future."
TROW is now back on track and estimates are for dividends to increase to $1.78 (+17.10%) in 2014 and $1.99 (+11.79%) in 2015. Those estimated dividends are in keeping with a payout ratio of approximately 40%.
Below are a few other company fundamentals I like to review when I research any company. Everything here looks good but not perfect (no company ever is perfect!). I generally like to see a P/E ratio below 20 and a dividend above 2.5% but a company whose earnings are currently growing at 15%, a dividend that's growing at a rate above 11% and a payout ratio less than 40% more than makes up for it's other shortcomings. In addition, an expected total one year return on my investment of 13.32% is an excellent return. Even if the "experts" are off by 20% I'll still expect to receive more than a 10% gain. Information like that might just be the kind of information that convinces me to begin accumulating shares in this company for the long haul.
Beta = 1.33
P/E Ratio = 20.67 PEG = 1.43
Current Dividend = $1.76
Current Yield = 2.18% ($1.76/$80.63)
1 Year Target = $89.62
1 Year Percentage Gain = 11.14% ($89.62/$80.63)
Total 1 Year Return on Investment = 11.14% + 2.18% = 13.32%
Revenue Growth Rate 3 year = 13.67% 5 year = 10.52% 10 year = 13.39%
Earnings Growth Rate 3 year = 15.35% 5 year = 16.46% 10 year = 16.05%
Dividend Growth Rate 3 year = 11.93% 5 year = 9.62% 10 year = 15.81%
Return on Equity = 23.40%
The weekly chart also shows similar results and it can easily be seen that the price has bounced off the lower Bollinger Band.
My intent going forward is to accumulate a position in this stock when the price pulls back to the $77-$78 level. There's no doubt that this is a company I'd like to own for the long term. I just need to make sure I enter into this or any trade at the best possible price. Hopefully I'll be able to start accumulating this stock soon.