Portfolio Update
The FiveTwenty portfolio received no dividends in the past week.
| Past Week Dividend | $0 |
| Current Quarter Dividend (Q1 2022) | $345.81 |
| LifeTime Dividend | $2,456.62 |
| Estimated Annual Dividend | $4,349.65 |
The capital allocation for the week of 02/13/2022 to 02/19/2022 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 3 of 2022, the company released Q4 and full year 2021 earnings on 01/27/2022. In addition, the share price dropped 17.6% from $174.97 to $144.25 during the period.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 36 years | 35 years | |
| Yield | 2.92% | 2.47% | 2.24% |
| Payout Ratio | 36.59% | 33.25% | 39% |
| P/E | 11.27 | 13.19 | 16.56 |
Q4 and FY 2021 earnings report
Did TROW’s latest earnings report raise any warning flags?
In Q4 2021, TROW’s revenue grew 13.2%, net earnings decreased 5.5%, and EPS were 4.5% lower than the same period a year ago. On a non-GAAP basis, adjusted net income increased 8.3%, and adjusted EPS were 9.7% higher in Q4 2021 than Q4 2020.
For the full year 2021, revenues grew 23.6%, net income increased 29.9%, and EPS were 31.5% higher compared to FY 2020. On a non-GAAP basis, adjusted net income increased 31.6%, and adjusted EPS were 33.1% higher in 2021 compared to 2020.
| Revenue (in millions) | Net Income (in millions) | EPS . | |
| FY 2020 | $6,207 | $2,373 | $9.98 |
| FY 2021 | $7,672 | $3,083 | $13.12 |
| % Change | 23.6% | 29.9% | 31.5% |
Additional noteworthy developments during the quarter:
- During 2021 TROW returned a total of $2.8 billion to shareholders through cash dividends and share repurchases.
- On 02/08/2022, TROW declared Q1 2022 dividend of $1.20 per share payable on 03/30/2022 to shareholders of record as of 03/15/2022. The quarterly dividend represents an 11.1% increase over the previous dividend of $1.08 per share.
- ON 02/10/2022, TROW reported preliminary month-end AUM of $1.58 trillion as of 01/31/2022. The numbers represent a 6.5% decline from AUM as of 12/31/2021.
Thesis
Why are we adding to our position in TROW?
A weaker Q4 2021 and a rough start in 2022 for the stock market have triggered a sharp decline in TROW’s stock price. On the other hand, the recently announced dividend hike signals management confidence that the company will be able to continue growing earnings in the near as well as the long term.
Therefore, we remain confident in the company’s long-term prospects and view the current share price weakness as a good buying opportunity.
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