T. Rowe Price Dividend Growth Fund (PRDGX)
Ticker Symbol:
PRDGX
Fund Status:
Open to new Retail investors  /  Open to subsequent Retail investments
Fund Management
Fund Manager
  • Thomas J. Huber
  • Managed Fund Since: 03/31/2000
  • Joined Firm On 07/29/1994*
  • B.S., University of Virginia; M.S., University of Wisconsin

*Firm refers to T. Rowe Price Associates and Affiliates
Quarterly Commentaries
as of 12/31/2014

Large-cap U.S. stocks generated strong gains in the fourth quarter of 2014 and capped a sixth consecutive year of positive returns. The market found support in steady U.S. economic growth and renewed stimulus efforts in the eurozone and Japan. S&P 500 sector performance was mixed. Energy stocks tumbled as oil prices fell below $60 per barrel, a level not seen in more than five years. Telecommunication services and materials stocks fell to a lesser extent. On the plus side, utilities advanced by double digits, and consumer-oriented sectors benefited from expectations for increased consumer spending. According to S&P Dow Jones indexes, net dividend increases rose by $12.0 billion during the fourth quarter, while the average yield for dividend-paying stocks fell to 2.45% from 2.50% at the end of the third quarter.

The Dividend Growth Fund returned 6.41% in the quarter compared with 4.93% for the S&P 500 Index and 4.16% for the Lipper Large-Cap Core Funds Index. For the 12 months ended December 31, 2014, the fund returned 12.34% versus 13.69% for the S&P 500 Index and 11.33% for the Lipper Large-Cap Core Funds Index. The fund's average annual total returns were 12.34%, 14.55%, and 7.90% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2014. The fund's expense ratio was 0.66% as of its fiscal year ended December 31, 2013.

For up-to-date standardized total returns, including the most recent month-end performance, please click on the Performance tab, above.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary and you may have a gain or loss when you sell your shares.

Benchmark Definitions

Our utilities, information technology, and consumer discretionary stocks generated double-digit gains and were the portfolio's top-performing sectors for the quarter. Health care, industrials and business services, financials, and consumer staples outpaced the broader market with good returns. Our telecommunication service shares lost ground, and our energy stocks fell sharply. Industrials and business services is the portfolio's largest overweight relative to the S&P 500 Index. As global growth remains somewhat muted, we are focused on industries with durable, long-term growth opportunities and emphasize companies with attractive valuations that suggest limited downside.

We are reasonably optimistic about the U.S. economy and expect moderate growth, supported by diminished fiscal headwinds, improved labor and housing markets, and healthier consumer finances. However, a temporary market pullback is possible as the market's appreciation has generally outpaced fundamentals. We are also mindful of potential risks in the coming year, including the timing and pace of interest rate hikes by the Federal Reserve, sluggish overseas growth, and ongoing geopolitical uncertainties. Research into individual stocks will become increasingly vital when seeking superior long-term returns, particularly as companies wrestle with only a moderately growing economy.

See Glossary for additional details on all data elements.