T. Rowe Price
Money manager T. Rowe Price (TROW) was hit pretty hard by contracting balance sheets and retirement accounts, as it saw revenue fall for two consecutive years. However, as accounts recovered, the company has returned to solid revenue growth, easily eclipsing its 2006 to 2007 numbers. The firm has raised its dividend 10% this year to $1.36 per share, and it recently announced a special dividend of $1 per share. We like its cash-rich business model, and its ability to increase cash returns to shareholders. Still, its 2.1% dividend yield at the time of the writing of this article is not large enough to turn our head.
Dividend Aristocrat Cincinnati Financial (CINF) is a property casualty insurer that was so well-positioned heading to the Great Recession that it didn't cut its dividend. The insurer does an excellent job managing its float, keeping a heavy weighting in equities, such as Berkshire Hathaway (BRK.A), which has helped the company's investment portfolio outperform. In fact, a few days ago, CFO Mike Sewell noted that the company sits on $1 billion in unrealized portfolio gains.
Shares currently yield roughly 4%, and the company has indicated that with or without a change in the tax code that it will not change its dividend policy. Cincinnati Financial looks like a solid bet to continue to return cash to shareholders. However, we believe shares are slightly overvalued at current levels.
Shares of Dividend Aristocrat Aflac (AFL) have been on a tear recently as the company's underlying performance continues to improve. In fact, during its most recent quarter, the company reported fantastic double-digit growth in Japan, as well as solid 5% expansion in the U.S. As a supplemental insurance company, Aflac benefits from providing insurance on top of normal health insurance plans, which has led to strong profitability.
After the recent rally in shares, the market is now fairly valuing the company. However, as the firm steadily makes solid profitability gains, we think it will continue to be friendly with respect to raising its dividend, which it recently bumped 6% to $0.35 per share per quarter. The firm is another company that raised its dividend during the midst of financial disaster, revealing the firm's prudent cash management strategies.
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