Buy these two high-income financials

Article Excerpt

IGM FINANCIAL INC. $37 (Toronto symbol IGM; Conservative Growth Payer Portfolio, Finance sector; Shs. o/s: 240.5 million; Market cap: $8.9 billion; Divd. yield: 6.1%; Dividend Sustainability Rating: Above Average; Price-tosales ratio: 3.0; www.igmfinancial.com) is Canada’s largest independent mutual fund provider. Power Financial owns 61.5% of IGM. The company has two main businesses: Mackenzie Financial sells funds through independent brokers; Investors Group offers mutual funds and other services, such as portfolio management, through 5,380 affiliated advisors. New rules now require investment firms to disclose more details on the fees they charge clients. It’s possible these changes could hurt mutual fund sales. However, Investors Group forms close relationships with its clients, which should help it adapt to the new rules. IGM’s fee income rises and falls with the value of the mutual funds and other securities it manages; that adds to its risk. The company also faces strong competition from low-fee exchange-traded funds (ETFs) and robo-advisors (automated, Internet-based advisory/portfolio management services). Even so, the company’s current…

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