Why Is T. Rowe Price's Dividend So High?
T. Rowe Price (NASDAQ: TROW) is offering investors a historically generous 4.4% yield today. For long-term dividend investors, that should spark at least a little interest, as it suggests that Wall Street has placed the shares on the discount rack. There are definitely reasons to worry about near-term financial results, but the long term may not be as bleak as investors fear.
T. Rowe Price gets paid to manage money on behalf of its customers. The fees it receives for this service go up and down based on the amount of money it is managing, or its assets under management (AUM). There are two ways that AUM changes over time. One is customer-driven, as clients give T. Rowe Price money to manage or, conversely, withdraw money. Money tends to be fairly sticky in the asset management business, so this is normally not the main driver.
Image source: Getty Images.
Source Fool.com
