Why I Sold Dividend Aristocrat T. Rowe Price

Earlier this week, I did something that I really don’t like to do.

I sold a stock from our Top 20 Dividend Stocks and Long-term Dividend Growth portfolios, exiting my position in T. Rowe Price (TROW).

T. Rowe Price, perhaps best known for being one of the 51 dividend aristocrats, is one of the world’s largest investment managers with over $800 billion in assets under management (AUM).

I originally purchased shares of T. Rowe Price during the summer of 2015 and was attracted to the company for several reasons:

Few companies have earned the trust of their clients like TROW, made possible from its long-term track record and scale.

Over 80% of TROW’s mutual funds outperformed their comparable Lipper averages over the last 3-, 5-, and 10-year periods.

TROW’s average annual fee is less than 50 basis points, much less than the 77 basis points charged by the average U.S. mutual fund.

Approximately two-thirds of TROW’s AUM is tied up in retirement and annuity funds, stickier products that benefit from the aging population.

As the highly fragmented fund industry continues facing pressure on fees, TROW’s scale could make it a natural consolidator.

When I buy shares of a business, I hope to hold my ownership stake forever.

In fact, our three dividend portfolios reported turnover rates of just 16%, 9%, and 7% in 2016, reflecting my belief that buy-and-hold investing is one of the most effective habits of successful dividend investors.

While such a strategy isn’t the most exciting approach, its simplicity and focus on the long-term resonate well with me.

However, the future doesn’t always play out how I expect it to, which prompts me to make an occasional adjustment or two in my portfolio.

Even the best investors are usually wrong more than 40% of the time. That’s just the nature of investing, which contains a good deal of uncertainty.