The company’s mutual fund and portfolio management businesses continue to support its dividend, now offering a high 6.9% yield following the most-recent increase in May.
A recent acquisition has diversified the holding company’s operations outside of North America at the same time it looks to the cloud for efficiency gains.
POWER CORP. (Toronto symbol POW; www.powercorporation.com) is a holding company with a diversified list of businesses. Its primary investments are controlling stakes in Great-West Lifeco, IGM Financial, and Swiss-listed Pargesa Holdings SA. Pargesa holds stakes in seven large European firms.
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Power also has an investment platform with investments in U.S. and European private equity/credit, China (equities and asset management), Fintech, and renewable energy.
Power recently acquired the remaining interest in Power Financial that it didn’t already own. It gave investors its own shares in exchange for Power Financial shares. This cuts duplication and costs, plus makes Power’s structure easier to value.
Dividend Stocks: Five-year modernization plan at IGM is underway
Meanwhile, IGM Financial draws its gains from the performance of two main businesses: Mackenzie Financial sells funds and ETFs through independent brokers; and IG Wealth Management offers mutual funds and other services such as portfolio management.
IGM has now chosen Google Cloud to manage its data platform. The migration of those files to a cloud-based environment will enhance the efficiency of its operations as well as their productivity, flexibility and service levels. This is part of IGM’s ongoing five-year plan to modernize its digital platforms and technology infrastructure. That should pay off for investors.
To conserve cash during the COVID-19 pandemic, Power has suspended its share buyback plan. It spent $193 million on buybacks in the first quarter of 2020.
Power last raised its quarterly dividend by 10.5% with the May 2020 payment, to $0.4475 a share from $0.405. Your new annual rate of $1.79 yields a high 6.9%.
One of the investing traps is “you are paid to wait”. Depending on how long the wait it is, you could be losing significantly on total return. I agree that investing in companies that are dividend growers is a good strategy, as the dividend growth is indicator of strength and management confidence in that strength. On the other hand those that are merely maintaining could be traps. Over the years I have become quite skeptical of analyst reports that emphasize dividend, but give only “platitudes” on their growth potential. To me the “platitudes” are an indicator that the total return is likely to be poor. I do not need dividend income, so I am focused on total return. It would be useful for you to include some real specific forecast of total return when you list dividends. Companies like Power with significant management ownership are taking money out of the company by keeping the dividend rate high. They are not investing in the company’s growth.
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One of the investing traps is “you are paid to wait”. Depending on how long the wait it is, you could be losing significantly on total return. I agree that investing in companies that are dividend growers is a good strategy, as the dividend growth is indicator of strength and management confidence in that strength. On the other hand those that are merely maintaining could be traps. Over the years I have become quite skeptical of analyst reports that emphasize dividend, but give only “platitudes” on their growth potential. To me the “platitudes” are an indicator that the total return is likely to be poor. I do not need dividend income, so I am focused on total return. It would be useful for you to include some real specific forecast of total return when you list dividends. Companies like Power with significant management ownership are taking money out of the company by keeping the dividend rate high. They are not investing in the company’s growth.
Thanks for your comments and thoughts.