Time for Another Performance Check
For some background on the idea behind the Performance Check, and the XIRR function used for the calculations, please see my first post in this series.
It’s been several months since my last Performance Check (Sept. 2018), but the series continues with a look at another dividend-paying stock from my Portfolio. This time it’s T. Rowe Price Group (TROW), a large-cap company in the Financial sector, part of the Asset Management industry.
TROW was founded in 1937 in Baltimore, Maryland. The company is still headquartered there today. The company operated only in the U.S. until 1979 when it branched out internationally. Today it’s got a well-established global presence. TROW provides services to individuals, institutions and retirement plans. It’s primarily known for its mutual funds – both equity and fixed income. Shortly after celebrating its 80th anniversary of existence, TROW crossed $1 trillion in assets under management.
TROW is a dividend aristocrat, with over 25 years of consecutive dividend increases. In fact, their dividend raise streak sits at 33 years after including the company’s 8.57% raise from February.
The dividend growth for TROW has been excellent over the years. Despite ups and downs on a single-year basis, the 3-yr., 5-yr. & 10-yr. dividend growth rates have been 10.42%, 13.00% and 11.30%, respectively. With a payout ratio still in the low 40% range, I’m hopeful that similar dividend growth can continue into the near future.
Since TROW is a relatively new Portfolio position (only a few years), I don’t have a large amount of data/time to factor into the return calculated in this Performance Check. Thus, large price changes can have a significant impact on my annualized return.
My Personal Performance for TROW
My history with TROW is a little different than those I’ve had with the other stocks I’ve profiled in my Performance Checks. That’s because I’ve had several holding periods with TROW in which I’ve been in and out of the stock. The first three encounters with TROW were all profitable, with the holding period being months in each case. You can see these in the table below.
For the purposes of this calculation, I consider my initial purchase of TROW as coming in April 2015. The reason for this is that I’ve held the stock continuously since then. This purchase was essentially the first new stock I added when I made the decision to construct a dividend portfolio. As a result, I eliminated a good deal of my trading and TROW has stayed in my Portfolio.
Below is a capture of the spreadsheet I keep with the TROW cash flows, and the calculated XIRR. Compared to my five long-term Portfolio holdings, the table for TROW isn’t too long, thanks to its shorter holding period relative to those other stocks.
Here’s a note with regard to the ‘Type’ column entries: EOY Value = End Of Year Value, Dividend = a dividend that was not reinvested (a cash outflow)
The duplicate EOY Value entries at the end of each year (one negative, one positive) do not affect the cash flow, and can be thought of as boundary markers, allowing me to make the individual yearly return, and the annualized total return calculations.
From the table, one can see that TROW has been up and down in price over the past few years. It declined after I made my initial 2015 purchase, then rose a bit in 2016. That was followed by massive move up in 2017, before giving up nearly half of those gains in 2018. The start of 2019 has seen nice upward price movement, approaching the price point it finished with in 2017.
My last TROW transaction was a partial sale in mid-2017, where I took a capital loss of ~$430 by selling my highest priced shares from April 2015. Part of the reason for the sale was TROW had become an oversized position in my Portfolio at that time. Since that partial sale, I’ve been holding tight and collecting my dividends.
TROW currently has an above-average weighting in my Portfolio at 3.25% – my 10th largest position.
The yield for TROW is currently 2.91% – above my Portfolio average of 2.72%.
All TROW dividend payments I’ve received since my new position was started (on 4/7/2015) have been reinvested. However, you can see some dividend payment outflows in the table prior to that time.
My current investment in TROW is $6,933.68. My cost basis, which includes $1,015.08 in reinvested dividends, is $7,948.76.
Meanwhile, the current value is $11,694.94, which reflects a potential capital gain of nearly $3,750 should I liquidate my entire position. The annualized total return ends up being 11.83%, covering my initial purchase on 4/7/2015, through 5/19/2019.
Summary
I’ve owned TROW for a little over 4 years and am very satisfied with my 11.83% annualized return. My returns were muted the first year and a half after my initial investment. However, my patience paid off with the price gains made in 2017. I look for satisfying returns to continue for years to come.
Bringing the returns for my other Performance Check stocks (PG, RPM, AFL, PEP, JNJ, AL & GILD) up-to-date allows for the comparison below.
Note that rightmost column shows the year of my initial purchase for each stock, just to provide some detail with regard to how many years are part of the annualized return.
TROW currently stands at #2 in terms of annualized return for my Portfolio stocks that I’ve reviewed.
Gilead Sciences (GILD) remains my poorest performer of the stocks reviewed thus far. It’s just better than breakeven, at 0.28%. On the other hand, Aflac (AFL) continues to be my best performer at 13.16%. It’s even increased its annualized return since my last review.
With only a few years of data factoring into the calculation for my most recently added holdings, an uptick in their stock price can raise their annualized returns quickly. Thus, I’ll be sure to check back on their performances each time I review another stock in this series.
Thanks to the solid annualized returns being provided for me, TROW is staying in my Portfolio. With a yield near 3%, a history of paying increasing dividends and impressive dividend growth, TROW looks like a keeper.
Are you monitoring the performance of your portfolio stocks? If so, let me know about some of your winners and losers.