great-west lifeco

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. ...

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....

MANITOBA TELECOM SERVICES INC., $24.98, Toronto symbol MBT, fell 9% on Friday after the company cut its quarterly dividend by 34.6%, to $0.425 a share from $0.65. The new annual rate of $1.70 yields 6.8%. The company is the main provider of telephone services in Manitoba. Its Allstream subsidiary sells telephone, Internet and other communication services to businesses across Canada. The slow economy has cut business spending on new communication systems. That has hurt Allstream’s earnings. As well, Manitoba Telecom’s consumer businesses continue to face strong competition from cable companies....

CAE INC. $9.33 has won a contract to train maintenance technicians for the 17 new Hercules planes that will replace Canada’s existing fleet of military transport aircraft. The multi-year deal is worth $90 million. That’s small next to CAE’s annual revenue of $1.6 billion. However, military customers now account for just over half of CAE’s revenue and earnings. That cuts its exposure to the cyclical airline industry. Best Buy. MOLSON COORS CANADA INC. $45 has raised its quarterly dividend by 16.7%, to $0.28 U.S. a share from $0.24 U.S. The new annual rate of $1.12 U.S. yields 2.6%. Buy. MANITOBA TELECOM SERVICES INC. $28 has introduced a dividend reinvestment plan that lets shareholders use their cash dividends to buy new shares at a 3% discount to the market price. Buy....

Power Corp. trades at a holding company discount, which puts more assets to work for you, and adds a lot of appeal. The company also gives you exposure to a number of high-quality companies. POWER CORP. $27.32 (Toronto symbol POW; Shares outstanding: 409.1 million; Market cap: $11.2 billion; SI Rating: Above Average; Dividend yield: 4.3%) is a diversified holding company. It holds its financial assets through 66.3%-owned Power Financial. Power Corp.’s financial assets include 68.6% of Great-West Lifeco, one of Canada’s largest life insurers, and 56.3% 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)....

GREAT-WEST LIFECO $25.32 (Toronto symbol GWO; Shares outstanding: 947.4 million; Market cap: $24.0 billion; SI Rating: Above Average; Dividend yield: 4.9%) has finally had a quarter of break-even operating profits at its Putnam Investments subsidiary, after six consecutive money-losing quarters. Great West is Canada’s largest insurance company, with $463.2 billion in assets under administration. It also operates in the U.S. and Europe. In addition to insurance, it sells wealth management and other financial services. In August 2007, Great-West paid a bargain price of $4.2 billion U.S. for troubled Putnam Investments Trust, a leading U.S. mutual-fund company with $182 billion in assets. Putnam lost money for the next six quarters, due to internal problems, the stock-market downturn and the recession....

Brookfield Asset Management, $26.37, symbol BAM.A on Toronto (Shares outstanding: 572.9 million; Market cap: $15.1 billion), is a holding company that mainly focuses on real estate, infrastructure and power generation. Its holdings include interests in Brookfield Renewable Power Fund and BPO Properties, which owns, develops and manages office buildings. Brookfield Asset Management also holds resource investments, including Norbord. Brookfield Asset Management has a complex holding company structure that could make it difficult to spot problems, should they arise. We see the stock as okay to hold, but don’t recommend it for new buying. RioCan, $18.56, symbol REI.UN on Toronto (Units outstanding: 242.0 million; Market cap: $4.5 billion) – see above – is a buy for income and growth....

GREAT-WEST LIFECO $27 (Toronto symbol GWO; Shares outstanding: 945.3 million; Market cap: $25.5 billion; SI Rating: Above Average; Dividend yield: 4.6%) is Canada’s largest insurance company, with $458.6 billion in assets under administration. The company also operates in the U.S. and Europe. Aside from insurance, Great-West sells wealth management and other financial services. In the three months ended December 31, 2009, Great-West’s earnings, excluding one-time items, fell 15.6%, to $443 million or $0.47 a share. A year earlier, it earned $525 million, or $0.59. Revenue fell 4.3%, to $14.7 billion from $15.3 billion....

Power Corp. has moved up this year, along with most financial services related stocks. Both of its major holdings are leaders in their fields. Both are still cheap in relation to earnings, and both have a long history of raising their dividends. POWER CORP. $29.32 (Toronto symbol POW; Shares outstanding: 408.4 million; Market cap: $12.0 billion; SI Rating: Above Average; Dividend yield: 4.0%) is a diversified holding company. Power Corp. holds its financial assets through 66.4%-owned Power Financial. Power Corp.’s financial assets include 68.7% of Great-West Lifeco, one of Canada’s largest life insurers, and 56.4% of IGM Financial, one of the country’s largest mutual-fund companies. As well, Power Financial owns 50% of holding company Parjointco, which holds a 54.3% 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)....