great-west lifeco
Toronto symbol GWO, is Canada’s largest insurance company. It also provides retirement planning and wealth management services.
GREAT-WEST LIFECO $27.02 (Toronto symbol GWO; Shares outstanding: 949 million; Market cap: $25.6 billion; TSINetwork Rating: Above Average; Dividend yield: 4.6 %; www.greatwestlifeco.com) gets most of its revenue from selling life insurance and wealth-management services to individuals. It also sells catastrophe insurance to other property and casualty insurance companies. The company estimates that claims stemming from the recent earthquake and tsunami in Japan will cut its earnings by $75 million in the three months ended March 31, 2011. The claims mostly relate to property catastrophe coverage sold by London Reinsurance Group, a subsidiary of Great West. However, this one-time charge is small next to the $1.9 billion, or $1.96 a share, that Great-West earned in 2010. Great-West Lifeco is a buy.
Brompton Equity Split Corp., $12.97, symbol BE on Toronto (Shares outstanding: 1.7 million; Market cap: $21.9 million; www.bromptongroup.com) mainly invests in large-cap Canadian stocks. The fund was scheduled to wind up on May 31, 2011. However, it now plans to merge with Dividend Growth Split Corp., $9.21, symbol DGS on Toronto (Shares outstanding: 4.3 million; Market cap: $40.0 million; www.bromptongroup.com), on May 18, 2011. The new Dividend Growth Split Corp., symbol DGS on Toronto, will have a termination date of November 30, 2019....
GREAT-WEST LIFECO INC. $27 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 948.5 million; Market cap: $25.6 billion; Price-to-sales ratio: 0.8; Dividend yield: 4.6%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) gets most of its revenue from selling life insurance and wealth-management services to individuals. It also sells catastrophe insurance to other property and casualty insurance companies. The company estimates that claims stemming from the recent earthquake and tsunami in Japan will cut its earnings by $75 million in the three months ended March 31, 2011. To put that in context, Great-West earned $1.9 billion, or $1.96 a share, in 2010. Great-West Lifeco is a buy.
Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific investment advice. Each Investor Toolkit update gives you a fundamental piece of investment strategy, and shows you how you can put it into practice right away. Tip of the week: “Smart investing limits the danger of lawsuits.” Lawsuits are an everyday risk in business. For example, U.S. lawnmower engine maker Briggs & Stratton (symbol BGG on New York) recently paid $18.7 million U.S. to settle a lawsuit that accused the company of using misleading labels on its lawnmower engines....
POWER CORP. $27.66 (Toronto symbol POW; Shares outstanding: 409.3 million; Market cap: $11.3 billion; TSINetwork Rating: Above Average; Dividend yield: 4.2%) is a diversified holding company. It holds its financial assets through 66.1%-owned Power Financial. Power Corp.’s financial assets include 68.4% of Great-West Lifeco, one of Canada’s largest life insurers, and 56.6% of IGM Financial, one of the country’s leading mutual-fund companies. Power Financial also owns 50% of holding company Parjointco, which holds a 54.1% stake in Switzerland-listed Pargesa Holdings SA. Pargesa has 95% of its assets in five large European companies: Imerys (minerals), Total SA (oil), Pernod Ricard (wine and spirits), Suez (energy, water and waste services) and Lafarge SA (cement and building materials). Excluding one-time items, Power Corp.’s earnings rose 8.7%, to $274 million, or $0.58 a share, in the three months ended September 30, 2010. A year earlier, it earned $252 million, or $0.53 a share. The increase came from a higher contribution from Power Financial, which gained from its holdings in Great-West Lifeco and IGM Financial....
Power Corp. gives you exposure to a number of high-quality companies that will gain from an ongoing economic recovery. It also trades at a holding company discount, which puts more assets to work for you, and adds a lot of appeal. POWER CORP. $27.66 (Toronto symbol POW; Shares outstanding: 409.3 million; Market cap: $11.3 billion; TSINetwork Rating: Above Average; Dividend yield: 4.2%) is a diversified holding company. It holds its financial assets through 66.1%-owned Power Financial. Power Corp.’s financial assets include 68.4% of Great-West Lifeco, one of Canada’s largest life insurers, and 56.6% of IGM Financial, one of the country’s leading mutual-fund companies. Power Financial also owns 50% of holding company Parjointco, which holds a 54.1% stake in Switzerland-listed Pargesa Holdings SA. Pargesa has 95% of its assets in five large European companies: Imerys (minerals), Total SA (oil), Pernod Ricard (wine and spirits), Suez (energy, water and waste...
TRANSCANADA CORP. $37.42 (Toronto symbol TRP; Shares outstanding: 693 million; Market cap: $25.9 billion; SI Rating: Above Average; Dividend yield: 4.3%; www.transcanada.com) agreed to build a natural-gas-fired electrical-power plant in Oakville, Ontario, in 2008. It also signed a 20-year deal to sell this plant’s electricity to Ontario’s power regulators. However, the Ontario government now feels that the plant is no longer needed, and has cancelled the project. As a result, the government will pay TransCanada an undisclosed termination fee to compensate the company for the funds it has spent on the project to date. TransCanada is still a buy....
SNC-LAVALIN GROUP INC., $52.78, Toronto symbol SNC, is a leading Canadian engineering and construction company. SNC also owns 16.77% of Highway 407, a 108-kilometre toll highway north of Toronto. This week, the Canadian Pension Plan Investment Board (CPPIB) agreed to buy 10% of Highway 407 from the highway’s main shareholder, Ferrovial S.A. of Spain. Ferrovial currently owns 53% of 407. CPPIB agreed to pay $894.3 million for 10% of the 407. However, SNC intends to exercise its right of first refusal and buy these shares from Ferrovial. That will raise SNC’s stake in the highway to 26.77%....
Regardless of whether you follow an aggressive or conservative investing approach, we continue to recommend that you own shares of at least two of Canada’s big-five banks — Bank of Montreal, Royal Bank, CIBC, TD Bank and Bank of Nova Scotia. However, banks shouldn’t be the extent of your Canadian financial holdings. To increase your profits and cut your risk, it is also essential to diversify your holdings within each economic sector — including Canadian finance. Other types of financial investments, such as non-bank financial companies, should also play a role in your portfolio.
High-quality non-bank financials could be big winners in the ongoing recovery
...
Great-West Lifeco and IGM Financial get a big part of their earnings from fee income that varies with the value of the securities they manage. Rising stock markets have increased earnings at both companies. As well, both are taking fewer writedowns on bonds and mortgage-backed securities because of improving credit markets. GREAT-WEST LIFECO INC. $25 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 947.9 million; Market cap: $23.7 billion; Price-to-sales ratio: 0.7; Dividend yield: 4.9%; SI Rating: Above Average) is Canada’s largest insurance company, with $460.2 billion of assets under management. That’s up 4.1% in the past year. Great-West also sells retirement-planning and wealth-management services....