Here's How T. Rowe Price Can Afford Its 4.4% Dividend Yield
T. Rowe Price's (NASDAQ: TROW) business can be summarized in one statement: It manages money for other people. That tells you a huge amount about the business, helping to explain why the stock has declined 50% from its 2021 highs and why the company believes it can still afford its 4.4% dividend yield. But there are some important nuances to understand here, including a discussion of the asset manager's balance sheet.
At the end of the first quarter of 2023, T. Rowe Price had assets under management (AUM) of about $1.34 billion. This is, perhaps, the most important number to watch here because AUM represents the money that the company manages on behalf of others. The fees it charges, for things like mutual funds, are generally based on a percentage of the assets managed. So, as AUM goes up and down, so does revenue and earnings.
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Source Fool.com
