The Growing Power of Dividends

Learn everything you need to know in '7 Winning Strategies for Dividend Investors' for FREE from The Successful Investor.

The Best Canadian Dividend Stocks to Buy: REITS Canada and other Top Canadian Dividend Stocks.

 I consent to receiving information from The Successful Investor via email. I understand I can unsubscribe from these updates at any time.

Topic: Dividend Stocks

GREAT-WEST LIFECO INC. $35

GREAT-WEST LIFECO INC. $35 (Toronto symbol GWO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 993.4 million; Market cap: $34.8 billion; Price-to-sales ratio: 1.0; Dividend Yield: 3.9%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) is Canada’s second-largest insurance company, after Manulife Financial (Toronto symbol MFC). It also offers mutual funds, retirement planning and wealth management. Power Financial (Toronto symbol PWF) owns 71.4% of Great-West.

As of December 31, 2015, the company had $1.2 trillion of assets under administration, up 14.0% from a year earlier.

Great-West gets 43% of its earnings from Canada, where it operates under well-known labels Great-West Life, Canada Life and Freedom 55. The European division (42% of earnings) mainly sells group insurance and annuity products in the U.K., Ireland and Germany.

In the U.S. (15% of earnings), Great-West is a leading provider of employer-sponsored retirement savings plans. It also owns mutual fund firm Putnam Investments.

Great-West continues to profit from two recent acquisitions.

In July 2013, it paid $1.75 billion for Ireland’s largest pension manager and life insurance provider- —Irish Life. In July 2015, it paid an undisclosed sum for the Irish operations of Legal & General Group plc. It provides investment and tax-planning services to wealthy individuals.

In 2015, Great-West’s earnings rose 8.5%, to $2.8 billion, or $2.77 a share, from $2.55 billion, or $2.55, in 2014. Higher earnings from Europe and the U.S. offset lower earnings in Canada. Due to losses on its investment portfolio, revenue fell 13.7%, to $33.8 billion from $39.2 billion.

The company recently raised its quarterly dividend by 6.1%, to $0.346 from $0.326. The new annual rate of $1.38 yields 3.9%. The stock trades at just 11.9 times Great-West’s forecast 2016 earnings of $2.93 a share.

Great-West Lifeco is a buy.

Comments

Tell Us What YOU Think

You must be logged in to post a comment.

Please be respectful with your comments and help us keep this an area that everyone can enjoy. If you believe a comment is abusive or otherwise violates our Terms of Use, please click here to report it to the administrator.