T. Rowe Price has increased its dividend for 40 consecutive years and now offers a forward yield of 4.4%, but its stock has made no net gains since mid-2022, raising the question of whether the payout is a bargain or a value trap. The company's fee-bearing assets under management have grown from just over $1.3 trillion in mid-2022 to $1.7 trillion in the first quarter of this year, aligning with the S&P 500's growth when excluding the Magnificent Seven stocks. Investors have been distracted by the artificial intelligence boom, but once that mania cools, traditional mutual funds and reliable dividend payers like debt-free T. Rowe Price could regain favor. The stock trades at a forward price-to-earnings ratio of less than 12, and the yield is seen as a potential long-term bargain rather than a trap.
T. Rowe Price Group IncStock is undervalued with low P/E and high yield, and dividend growth history suggests bargain.