Only Four Days Left To Cash In On T. Rowe Price Group's (NASDAQ:TROW) Dividend
T. Rowe Price Group, Inc. (NASDAQ:TROW) stock is about to trade ex-dividend in four days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. This means that investors who purchase T. Rowe Price Group's shares on or after the 15th of December will not receive the dividend, which will be paid on the 30th of December.
The company's next dividend payment will be US$1.27 per share. Last year, in total, the company distributed US$5.08 to shareholders. Calculating the last year's worth of payments shows that T. Rowe Price Group has a trailing yield of 4.8% on the current share price of US$105.37. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.
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 more than half (55%) of its earnings last year, which is a regular payout ratio for most companies.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Check out our latest analysis for T. Rowe Price Group
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're not enthused to see that T. Rowe Price Group's earnings per share have remained effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, T. Rowe Price Group has lifted its dividend by approximately 9.3% a year on average.
The Bottom Line
From a dividend perspective, should investors buy or avoid T. Rowe Price Group? T. Rowe Price Group's earnings are effectively flat over recent years, even as the company pays out more than half of its earnings to shareholders as dividends. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're on the fence about its dividend prospects.
So if you want to do more digging on T. Rowe Price Group, you'll find it worthwhile knowing the risks that this stock faces. To help with this, we've discovered 1 warning sign for T. Rowe Price Group that you should be aware of before investing in their shares.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.