GREAT-WEST LIFECO $24.20 - Toronto symbol GWO

GREAT-WEST LIFECO $24.20 (Toronto symbol GWO; Shares outstanding: 950.5 million; Market cap: $23.0 billion; TSINetwork Rating: Above Average; Dividend yield: 5.1%) is Canada’s largest insurance company, with $532.0 billion in assets under administration. It also sells mutual funds, retirement-planning and wealth management services. Power Financial owns 68.2% of Great-West.

In the quarter ended September 30, 2012, earnings rose 13.8%, to $520 million, or $0.55 a share. A year earlier, it earned $457 million, or $0.48 a share. Revenue rose 1.5%, to $8.6 billion from $8.5 billion.

Earnings from the Canadian division (which supplies 54% of the total) rose 19.6%. Stronger sales to individuals offset lower demand for group policies. As well, the value of the assets this division manages rose, which pushed up its fee income.

The company’s European division (32% of the total) saw its earnings rise 11.5%. The U.S. division (14% of earnings) is still seeing strong demand for retirement services and individual policies. As well, the division’s Putnam mutual fund business continues to cut its losses. As a result, Great-West’s U.S. earnings rose 16.0% in the quarter.

The stock trades at just 11.4 times the $2.12 a share that the company is likely to earn in 2013. The shares yield a high 5.1%.

Great-West Lifeco is still a buy.

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