December 13, 2018

Great-West Lifeco (GWO)

Great-West Lifeco (GWO) is a financial company based out of Winnipeg, MB.  It is the 2nd largest of the Canada’s Insurers, and is part of the three-headed oligopoly along with rivals Sun Life (SLF)  and Manulife (MFC).  They offer a broad range of services centered around life and health insurance, as well as investment management and retirement savings.  Great-West Lifeco is a key cog in the massive financial holding company of Power Corp (POW) which owns a controlling share (72.6%) of the company through its subsidiary Power Financial (PFF).  Great-West Lifeco has steadily expanded over the years, and now it includes five main subsidiaries of its own.  They are The Canada Life Assurance Company, Great-West Life & Annuity Insurance Company, The Great-West Life Assurance Company, London Life Insurance Company, and their fairly recent (2007) American purchase of Putnam Investments.  Great-West Lifeco (GWO) is an internationally diversified financial company with operations in Asia, Europe and North America.  They have roughly 500 billion dollars worth of assets under their direct control.

 

Great-West-Life-LogoWhile the insurance sector has taken a beating in recent years (even relative to the rest of the underperforming economy), things maybe looking up for Great-West Lifeco (GWO).  The company recently reported that quarterly profits rose to $526 million, which is up from $455 million a year earlier.  This is a profit of about 55 cents per common share ). This is important as the Globe and Mail reports that Great-West will likely not hike their dividend until yearly earnings per share are closer to the $2.50 mark.  Great-West Lifeco has not raised its dividend since the second quarter of 2008 (this actually compares favourably to rival Manulife financial who had to cut its dividend in half in order to keep the company in an advantageous position).  The report also stated that the formerly profit-challenged U.S. money manager Putnam Investments was one of the main reasons for the company’s uptick as they seen their sales go up to 3.4 billion.  This is a substantial gain considering they weren’t even in the black for the quarter last year.  Further encouraging news was forthcoming when Great-West (GWO) released a press briefing that stated the company had very limited exposure to the European debt contagion that is polluting the balance sheets of many other financial companies out there.  They have also moved to further limit their European holdings, and do not expect further developments in the crisis to effect their bottom line.

 

Like every stock in the Canadian insurance sector, owners of Great-West Lifeco (GWO) have seen their losses add up over the past few years.  The stock is current trading at around $23 a share, and it is definitely undervalued at that price.  For a company with 100+ years of experience and an internationally diversified record, its Price-to-Earnings ratio is a meagre 13.24, and its dividend (which again, has not been raised in 4 years) is still yielding 5.4%.  I fully believe that now is the time to lock in a solid entry position on the stock and be there for the dividend raises that will be coming in the near future.

 

Great-West Lifeco (GWO) Dividend Stock Graph:

TSE GWO

Great-West Lifeco (GWO) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
GWOGreat-West Lifeco Inc26.654.6170.370.23558967.9579240

 

Trackbacks

  1. […] Its three largest subsidiaries and the percentages of them that Power Financial (PWF) owns are Great-West Lifeco (68%), IGM Financial Inc. (57%), and Parjointco N.V. (50%).  Through these holdings Power owns a […]

  2. […] two-thirds of.  Through this subsidiary, Power Corp (POW) owns notable financial companies such as Great-West Lifeco Inc. (GWO) and IGM Financial management (IGM), which of course are also publically traded companies in their […]

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