Portfolio Update
The FiveTwenty portfolio received $73.86 in dividends in the past week. BEN and LEG paid their quarterly dividend during the week.
| Past Week Dividend | $73.86 |
| Current Quarter Dividend (Q1 2022) | $103.44 |
| LifeTime Dividend | $2,214.25 |
| Estimated Annual Dividend | $4056.76 |
The capital allocation for the week of 01/16/2022 to 01/22/2022 will be used to add to our position in T. Row Price Group (NASDAQ: TROW)
TROW – Position Update
Since our last check-in on TROW in week 8 of 2021, the company Q1 2021 earnings on 04/29/2021, Q2 2021 earnings on 07/29/2021, and Q3 2021 earnings on 10/28/2021. In addition, the share price increased 7.5% from 162.77 to 174.97 during the period.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 35 years | 35 years | |
| Yield | 2.47% | 2.21% | 2.24% |
| Payout Ratio | 33.25% | 43.29% | 39% |
| P/E | 13.19 | 16.24 | 16.58 |
Q3 2021 earnings report
Did TROW’s latest earnings report raise any warning flags?
In Q3 2021, TROW revenue growth of 22.5%, net earnings increase of 20.8%, and EPS were 21.2% higher than the same period a year ago. On a non-GAAP basis, adjusted net income for the period increased 27.4% and adjusted EPS were 28.2% higher.
Furthermore, for the fist 9 months of FY 2021 revenues grew 27.6%, net earnings increased 47.4%, and EPS were 49.2% higher compared to the same period in FY 2020. On a non-GAAP basis, adjusted net income increased 41.5% and adjusted EPS were 43.3% higher.
| Revenue (in millions) | Net Income (in millions) | EPS . | |
| Q3 2020 | $1,596 | $643.2 | $2.73 |
| Q3 2021 | $1,954 | $777.2 | $3.31 |
| % Change | 22.5% | 20.8% | 21.2% |
Additional noteworthy developments during the quarter:
- On 07/07/2021 TROW paid a special dividend of $3 per share to shareholders of record as of 06/25/2021.
- During Q3 2021 earnings the company announced that it has agreed to purchase Oak Hill Advisors, L.P. The $4.2 billion acquisition completed on 12/29/2021 included $57 billion of assets under management.
- On 1/12/2021 TROW reported assets under management as of 12/31/2021 of $1.688 trillion. This compares to assets under management of $1.470 trillion as of 12/31/2020 and $1.612 trillion as of 09/30/2021.
Thesis
Why are we adding to our position in TROW?
As mentioned in our previous update, TROW has long history of dividend growth and an average dividend growth rate of 12.30% for the past 10 years. In addition, the company continue to grow its net income and EPS at an impressive rate in FY 2021. And even though the company faces long term headwinds, its strong financial position today will allow it to adjust.
In addition, following the share price decline during the past week the yield and P/E valuation for TROW is at a level that we believe presents a good buy opportunity. Furthermore, the company is due its yearly dividend increase with the payment of its next dividend.
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