Assets under management improved despite a net outflow of new money as IGM continues to expand its presence outside Canada.
We think the company’s future is bright as it continues to offer a high yield at a relatively cheap valuation.
That’s because the stock trades at just 9.0 times the company’s 2024 earnings forecast.
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IGM FINANCIAL INC. (Toronto symbol IGM; www.igmfinancial.com) is Canada’s largest independent provider of funds with $261.7 billion in assets under management and administration as of August 31, 2023. Power Corp. (symbol POW on Toronto) owns 62.1% of the fund provider.
The company has two main businesses: Mackenzie Financial sells funds and ETFs through independent brokers; and IG Wealth Management (formerly Investors Group) offers mutual funds and other services, such as portfolio management, through its more than 3,000 affiliated advisors.
IGM’s fee income rises and falls with the value of the mutual funds and other securities it manages.
Thanks to rising stock markets, IGM’s assets under management (and advisement) rose 5.9%, to $261.7 billion as of August 31, 2023, from $247.2 billion a year earlier.
IGM the company also reported a net outflow of new money (net of redemptions) of $306.6 million in August 2023. That was mainly due to redemptions at the Mackenzie division. In August 2022, overall net inflows totalled $27 million.
Dividend Stocks: Corporate transactions help focus IGM for better growth
The company’s outlook remains bright. It recently agreed to sell its Investment Planning Counsel wealth management business to Great-West Lifeco Inc. (Toronto symbol GWO) for $575 million.
The company also recently acquired a 20.5% stake in U.S. investment firm Rockefeller Capital Management for $622 million. It provides wealth management services, mainly to high-net-worth clients.
The transaction expands IGM’s presence outside of Canada. It should also lift earnings by about 9% in 2024 to $3.88 a share. The stock trades at just 9.0 times that forecast.
IGM last raised its quarterly dividend by 4.7% with the January 2015 payment. The current annual rate of $2.25 a share yields a high 6.4%.
Recommendation in Dividend Advisor: IGM Financial Inc. is a buy.