Yahoo Finance Here's What We Like About T. Rowe Price Group's (NASDAQ:TROW) Upcoming Dividend
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see T. Rowe Price Group, Inc. (NASDAQ:TROW) is about to trade ex-dividend in the next 3 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. This means that investors who purchase T. Rowe Price Group's shares on or after the 14th of June will not receive the dividend, which will be paid on the 29th of June.
The company's next dividend payment will be US$1.20 per share. Last year, in total, the company distributed US$4.80 to shareholders. Based on the last year's worth of payments, T. Rowe Price Group stock has a trailing yield of around 4.0% on the current share price of $121.21. If you buy this business for its dividend, you should have an idea of whether T. Rowe Price Group's dividend is reliable and sustainable. As a result, readers should always check whether T. Rowe Price Group has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for T. Rowe Price Group
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. T. Rowe Price Group paid out a comfortable 36% of its profit last year.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see T. Rowe Price Group's earnings have been skyrocketing, up 21% per annum for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. T. Rowe Price Group has delivered 14% dividend growth per year on average over the past 10 years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
To Sum It Up
Has T. Rowe Price Group got what it takes to maintain its dividend payments? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. In summary, T. Rowe Price Group appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
On that note, you'll want to research what risks T. Rowe Price Group is facing. For example, we've found 2 warning signs for T. Rowe Price Group (1 doesn't sit too well with us!) that deserve your attention before investing in the shares.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
