Higher interest rates enhance their appeal

Article Excerpt

The Bank of Canada recently raised its benchmark lending rate from 0.25% to 0.50%, its first increase since 2018. It has also signalled that more hikes are coming as it aims to lower Canada’s inflation rate to around 2% from the current 5.1%. Generally, higher interest rates should help these three financial firms. However, we feel IGM is in a stronger position to profit from higher rates than Great-West or Home Capital. GREAT-WEST LIFECO INC. $36 is a hold. The company (Toronto symbol GWO; Conservative Growth and Income Portfolios, Finance sector; shares outstanding: 930.6 million; Market cap: $34.4 billion; Price-to-sales ratio: 0.6; Dividend yield: 5.4%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) is Canada’s second-largest life insurer, after Manulife Financial. It also offers mutual funds and wealth management services. Power Corp. (Toronto symbol POW) owns 70.66% of the firm. The company has announced several transactions in the past year as part of a plan to diversify its operations. For example, Great-West’s Empower Retirement unit is buying the full-service retirement…

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