T. Rowe Price Dividend Growth Fund Review

If there are two things that we like to see in a portfolio it is dividends and growth.  These two items really make for a successful portfolio as not only are you receiving additional money through the dividend payouts, but your initial capital is also growing.  This T. Rowe Price Dividend Growth Fund Review will take a look at one of the best dividend growth mutual funds available for individual investors.  We’ll look at the asset allocation along with past historical performance, fees, management and provide an overall recommendation.

Let’s Begin The T. Rowe Price Dividend Growth Fund Review

T. Rowe Price Dividend Growth Fund Overview (PRGDX)

The T. Rowe Price Dividend Growth Fund’s primary objective is to seek dividend income and long-term capital growth primarily through investments in stocks. This important to note when assessing risk as the fund will largely reflect the broader stock market.

Investment Strategy

The main points of the fund’s investment strategy are outlined below.  Be sure to read each point carefully to determine if this is a fund that you would like to invest in.

  • 65% of the total assets will be in stocks with an emphasis on those that have a strong record of paying dividends and also increasing dividend payouts
  • Record of dividend growth shows financial health and solid companies
  • Good financial health usually points to growth

Who Should Invest In the T. Rowe Price Dividend Growth Fund?

The typical investor in this fund would meet or be able to identify with the following criteria:

  • You want to increase income over time
  • You want capital appreciation
  • You can accept a moderate level of risk
  • You can endure short-term market downturns
  • You want to invest in a traditional brokerage account or IRA
  • You are comfortable investing in large-cap stocks

If you agree with all or most of the points above, the PRGDX fund is probably for you.

Historical Performance of the The T. Rowe Price Dividend Growth Fund

Looking back at the 10-year performance for this fund, we can see that it has returned an average of 8.33% which is in-line with mutual funds in the same category.  Also, the expense ratio is only .66% which is relatively low for a mutual fund.  There are some Vanguard mutual funds that do have lower fees and similar performance, but .66 is not outrageous.

Overall Recommendation For T. Rowe Price Dividend Growth Fund

This type of growth fund is actually a very good fund and a great angle to tackle the stock market.  You are not going to have explosive gains or losses.  You will probably outperform the broader market due to the focus on investing in solid, blue-chip stocks, and you’ll also benefit int he down years by receiving a dividend payout.