(PUB) Investing 2015

Morningstar Analyst Rating

02-19-15

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Morningstar Pillars

Process

Performance

People

Parent

Price

Positive

Morningstar Analyst Rating

Morningstar evaluates mutual funds based on five key pillars, which

its analysts believe lead to funds that are more likely to outperform

over the long term on a risk-adjusted basis.

Analyst Rating Spectrum

Œ „ ´ˇ ¨

Pillar Spectrum

Positive

Negative

Neutral

NAV

37.18

36.13

33.65

26.34

23.34

22.88

20.48

16.51

25.50

25.36

22.78

22.92

Total Return %

2.91

12.34

30.35

14.85

3.53

13.26

26.15

-33.26

7.07

16.45

3.35

11.90

+/-S&P 500

0.34

-1.35

-2.04

-1.15

1.42

-1.80

-0.31

3.74

1.58

0.66

-1.56

1.02

+/-Russ 1000

-7.62

-0.90

-2.76

-1.57

2.03

-2.84

-2.28

4.34

1.30

0.99

-2.92

0.50

Income Return %

0.00

1.40

1.56

1.94

1.49

1.42

1.83

1.39

1.51

1.56

1.14

1.21

Capital Return %

2.91

10.94

28.79

12.91

2.04

11.84

24.32

-34.65

5.56

14.89

2.21

10.69

Total Rtn % Rank Cat

Income $

0.00

0.47

0.41

0.45

0.34

0.29

0.30

0.35

0.38

0.35

0.26

0.25

Capital Gains $

0.00

1.16

0.22

0.00

0.30

1.25

0.77

0.65

0.00

Expense Ratio %

0.65

0.66

0.67

0.68

0.72

0.73

0.69

0.72

0.75

0.78

Income Ratio %

1.33

1.37

1.77

1.53

1.47

1.72

1.71

1.40

1.48

1.09

1.21

Turnover Rate %

Net Assets $mil

4,247

4,360

3,823

2,584

2,047

1,659

1,004

682

884

871

773

755

Performance

02-28-15

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Total

2010

2011

2012

2013

2014

4.69 -11.38 10.12 10.87 13.26

5.90 0.96 -13.63 12.11

3.53

10.16 -1.90

5.64 0.61 14.85

10.48 2.76

5.05 9.31 30.35

1.49 3.94

0.08 6.41 12.34

Trailing

Total

+/-

+/- Russ %Rank Growth of

Return% S&P 500

1000

Cat

$10,000

3 Mo

6 Mo

1 Yr

3 Yr Avg

5 Yr Avg

10 Yr Avg

15 Yr Avg

3.06 0.75 -12.42

20 10,306

8.36 2.24 -13.31

3 10,836

15.02 -0.49

-4.13

26 11,502

17.37 -0.63

-8.81

38 16,169

15.35 -0.83

-4.55

37 20,422

8.28 0.29

-0.20

16 22,156

7.50 2.59

11 29,589

Tax Analysis

Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat

3 Yr (estimated)

5 Yr (estimated)

10 Yr (estimated)

16.33

0.89

14.51

0.73

7.40

0.81

Potential Capital Gain Exposure: 42% of assets

Rating and Risk

Time Load-Adj

Morningstar

Period Return % Rtn vs Cat

Risk vs Cat

Risk-Adj Rating

1 Yr

15.02

3 Yr

17.37

Avg

-Avg

5 Yr

15.35

Avg

-Avg

10 Yr

8.28

+Avg

-Avg

Incept

9.75

Other Measures

Standard Index

Best Fit Index

S&P 500

Russ 1000

Alpha

0.4

Beta

0.94

R-Squared

Standard Deviation

9.07

Mean

17.37

Sharpe Ratio

1.82

Morningstar’s Take

by Katie Rushkewicz Reichart, CFA 02-19-15

T. Rowe Price Dividend Growth has much working in its

favor. Low costs give it an edge versus peers. It has an

experienced manager in Tom Huber, who’s been at T.

Rowe for more than 20 years and has run this fund

since 2000. And Huber is supported by a large analyst

team that remains strong despite above-average

turnover the past few years.

Huber has followed a consistent process that

results in a mild-mannered portfolio. As its name

suggests, he looks for companies that have strong

enough free cash flows and earnings streams to pay

out a dividend, focusing on those that are poised to

grow their payouts.

Yet dividends aren’t the sole driver of the portfolio.

Huber assesses a company’s fundamentals, too, and

will invest in firms whose payouts are paltry or in rare

cases nonexistent (two holdings didn’t pay dividends as

of year-end 2014). Danaher DHR has long been a top

position in the portfolio despite its relatively low

payout. The cash-rich firm has historically used cash to

fund acquisitions. However, Huber likes the firm’s

culture and how it’s navigated through market cycles,

with its cash flows presenting a margin of safety.

Inclusion of such names has meant the fund’s yield

has typically been below the S&P 500’s and those of

other relevant benchmarks such as the Vanguard

Dividend Appreciation Index. Yet the fund retains the

tame risk profile of a fund focused on financially

healthy dividend-paying companies. It sports a

below-average Morningstar Risk rating (which

emphasizes downside deviations in returns). It’s been

resilient, losing only 78% as much as the S&P in

market downturns under Huber. That’s helped the fund

gain significantly more than the S&P and average

large-blend fund on Huber’s watch, despite its

tendency to look sluggish in big market rallies.

The fund has a slimmer lead over the Vanguard

Dividend Appreciation Index (which has only been

around since 2006) and trails that benchmark on a

risk-adjusted basis through January 2015. However,

the merits of the fund are still sufficient to warrant a

Silver Morningstar Analyst Rating.

Address:

T. Rowe Price Dividend Gr Fund, Inc

Baltimore, MD 21202

800-638-5660

Web Address:

www.troweprice.com

Inception:

12-30-92

Advisor:

T. Rowe Price Associates, Inc.

Subadvisor:

None

NTF Plans:

N/A

Minimum Purchase:

$2500

Add: $100 IRA: $1000

Min Auto Inv Plan:

$2500

Add: $100

Sales Fees:

No-load

Management Fee:

0.20%, 0.15%A

Actual Fees:

Mgt:0.50% Dist:

Expense Projections:

3Yr:$211

5Yr:$368 10Yr:$822

Income Distribution:

Quarterly

Data through February 28, 2015

T. Rowe Price Dividend Growth

Ticker

Status Yield Total Assets

Mstar Category

PRDGX Open

1.2% $4,486 mil

Large Blend

95% 91% 95% 95% 94% 94% 96% 96%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 02-15

Historical Profile

Return

Risk

Rating

Above Avg

Below Avg

Highest

Investment Style

Equity

Stock %

Manager Change

Partial Manager Change

Growth of $10,000

Investment Values of

Fund

Investment Values of

S&P 500

Performance Quartile

(within Category)

History

10.0

7.0

13.0

16.0

19.6

22.6

Portfolio Analysis

12-31-14

Share change since 09-14 Total Stocks:115 Sector

PE Tot Ret% % Assets

T. Rowe Price Reserve In

. . .

4.06

Visa Inc Class A

Finan Svs 30.3

2.08

Danaher Corp

Industrl

24.0

2.02

Pfizer Inc

Hlth care 24.3 11.08 1.99

UnitedHealth Group Inc

Hlth care 19.9 12.40 1.93

McKesson Corp

Hlth care 31.3

1.91

PepsiCo Inc

Cnsmr Def 23.2

1.78

JPMorgan Chase & Co

Finan Svs 10.7

1.73

Wells Fargo & Co

Finan Svs 13.4

1.68

United Technologies Corp

Industrl

17.9

1.63

State Street Corp

Finan Svs 16.3

1.61

Thermo Fisher Scientific

Hlth care 27.6 3.76 1.57

Time Warner Inc

Cnsmr Cyc 18.6

1.52

Crown Castle Internation

Comm Svs 83.3 9.67 1.47

Roper Industries Inc

Industrl

26.2

1.44

Merck & Co Inc

Hlth care 14.4 3.08 1.44

Texas Instruments Inc

Technology 22.5

1.33

Ross Stores Inc

Cnsmr Cyc 24.9 12.25 1.31

Becton Dickinson & Co

Hlth care 25.2 5.43 1.29

American Express Co

Finan Svs 14.6

1.28

Current Investment Style

Market Cap %

Giant

35.0

Large

48.0

Mid

17.0

Small

0.0

Micro

0.0

Avg $mil:

48,727

Value Blnd Growth

Large Mid Small

Value Measures

Rel Category

Price/Earnings

Price/Book

Price/Sales

Price/Cash Flow

Dividend Yield %

18.87

2.88

1.84

8.86

2.01

1.31

1.41

1.46

1.25

0.92

Growth Measures

% Rel Category

Long-Term Erngs

Book Value

Sales

Cash Flow

Historical Erngs

9.83

6.76

6.65

7.45

8.89

0.95

1.27

2.29

1.09

0.50

Profitability

% Rel Category

Return on Equity

Return on Assets

Net Margin

21.07

7.78

13.82

1.09

1.01

1.09

Sector

Weightings

% of

Stocks

Rel

S&P 500 High

3 Year

Low

Cyclical 36.98

BasicMat 5.79

6 4

CnsmrCyc12.33

13 11

FinanSvs 17.48

19 16

Real Est 1.38

1 0

Sensitive 35.08

CommSrvs 2.87

6 3

Energy 6.23

10 6

Industrl 16.91

17 13

Technlgy 9.07

12 8

Defensive27.93

CnsmrDef 8.59

11 9

Hlthcare 17.80

18 12

Utilities 1.54

2 1

Composition - Net

(% of Stock)

Cash

4.1

Stocks 95.6

Bonds 0.0

Other

0.3

Foreign 1.5

timely. Pastperformance is no guarantee of future results.Access updated reportsat

Toorder reprints, call312-696-6100.

mfb.morningstar.com.

Mutual Funds

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