Dividend Growth Opportunities: Identifying Growth-At-A-Discount

With fluctuating bond rates and uncertain markets, equity dividends are as important now as ever. Owning shares of quality companies with a solid history of increasing dividends could help maintain a strong core portfolio.

In the upcoming webcast, Dividend Growth Opportunities: Identifying Growth-At-A-Discount, Thomas J. Huber, Portfolio Manager, T. Rowe Price; and Chris Murphy, Senior ETF Specialist, T. Rowe Price, will underscore the importance of dividend growth investing and why financial advisors should incorporate a dividend growth strategy into their client portfolios.

Specifically, the T. Rowe Price Dividend Growth ETF (TDVG) seeks dividend income and long-term capital growth by investing the majority of its assets in the common stocks of dividend-paying companies expected to increase their dividends over time.

Using an active management strategy driven by fundamental analysis, TDVG’s manager seeks stocks that aren’t all about yield and yield alone. Staying power is what the fund looks out for — names that can sustain their dividends over time while also having solid fundamentals.

The portfolio typically holds between 100 to 125 dividend‑paying stocks selected through analysis based on fundamentals such as the potential for generating excess cash flow, the potential trajectory of the company’s financial condition, and the quality of the stock’s management. The portfolio maintains a relatively broad set of equities across industries to help manage position sizes and control the risk profile.

“We believe that a track record of dividend increases is an excellent indicator of financial health and growth prospects. Dividends can also help reduce the fund’s volatility during periods of market turbulence,” according to T. Rowe Price.

TDVG employs a conservative, “growth‑at‑a‑discount” approach that emphasizes dividend growth, especially when valuations appear temporarily depressed. Rather than chasing returns, this research-driven approach is designed to help limit the volatility typically experienced from shifts in momentum or changing investor sentiment.

“Our in-house research team looks for stocks with sustainable, above-average growth in earnings and dividends, and we attempt to buy them when they are temporarily out of favor or undervalued by the market,” according to T. Rowe Price.

Financial advisors who are interested in learning more about dividend growth strategies can register for the Wednesday, June 1 webcast here.