Great-West Lifeco Inc

For some unknown reason, McAfee Site Advisor is showing all blogspot.ca sites as risky. If you access my site from Canada, you now get it at blogspot.ca. If you access it from the US, you get it at blogspot.com. As a blogspot.com, my site is listed as trustworthy, but as a security risk if you get the site as blogspot.ca. A while ago, Google started to use the ".ca" extension for all persons accessing BlogSpot sites from Canada as blogspot.ca.

I do not own this stock of Great-West Lifeco (TSX-GWO), but a do have stock in Power Financial, the parent company. As of December 31, 2011, Power Financial owns 68.2% of this company. This is my first review of this stock after the December 2011 statements have been received. (See Wikipedia entry. However, this entry has not been kept up to date.)

The last dividend increase for this company was in 2008 which was a 5.8% increase. A lot of insurance companies are in this position. I have tracked this company since 1994 and this is the first period of no dividend increases since then. The 5 and 10 years growth in dividends is at 5.8% and 12.2% respectively. As you can see, the company has had good dividend increases in the past.

The 5 year Dividend Payout Ratios are 70% and 25% for earnings and cash flow, respectively. The 10 year median DPRs are lower at 64% and 24%, respectively. I would suspect that the company would rather have the DPRs for earnings in the 40 to 50% range before increasing dividends.

The current dividend yield on this stock is quite good at 5.8%. This is higher than both the 5 year median dividend yield and the 10 year median dividend yield which is at 4.65 and 3%, respectively. Most analysts expect no dividend increase for 2012. Some expect a small one for 2013 in the range of 2.4%.

Over the past 5 years investors would not have earned any money. The Total Return over the past 5 years is a negative 5.3%. Dividend income is around 4.3% per year. There would have been a capital loss. The Total Return over the past 10 year is better with a positive 6.6% per year return. Dividends would be a large part of this return with them at 4.8% per year and 73% of the total return. Capital gain would have been less than 2% per year.

When you look at growth over the past 5 and 10 years, you can see then the 10 year figures are higher than the 5 year ones. This is true of a lot of companies. The 5 and 10 year growth in Revenue per Share is 1.9% and 3.8%. The growth in Earnings per Share is 0% and 12% per year. The 10 year growth is quite good for EPS.

The 5 and 10 year growth in cash flow per share is 7.3% and 8.6% per year. This is not great, but not bad either. The growth in Book Value per Share is 2.3% and 9.2% per year.

This is a financial company and it is hard to get good current assets/current liabilities figures. The Liquidity Ratio is not much important anyway for financial companies. The Debt Ratio is at 1.07, which is lower than usual for this company. The 5 and 10 year median Debt Ratios are 1.11 and 1.13. However, the assets can cover the liabilities. Cash Flow does not change the Debt Ratios significantly.

For other debt ratios, the current Leverage Debt/Equity Ratio at 20.22 and 18.86 for the end of 2011 are quite high. They are both higher than the 5 year median values of 12.05 and 10.78, respectively. The reason for the higher Ratios is the new accounting rules under which both the assets and debts increased, but the book value did not. The current debt ratios are not better; in fact they are slightly higher.

Information on the 1st Quarterly results are at the G&M.

I will not be buying this stock for the simple fact that I have a fairly large investment in Power Financial that owns some 68.2% of this company. I do have other life insurance companies. I expect that life insurance companies will gradually recover from the financial crisis of 2008, but it will take some time.

Great-West Lifeco is a financial services holding company with interests in the life insurance, health insurance, retirement savings, investment management and reinsurance businesses. The Corporation has operations in Canada, the United States, Europe and Asia through The Great-West Life Assurance Company, London Life Insurance Company, The Canada Life Assurance Company, Great-West Life & Annuity Insurance Company and Putnam Investments, LLC. Lifeco and are members of the Power Financial Corporation group of companies. Its web site is here Great-West Lifeco. See my spreadsheet at gwo.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.