Thursday, September 5, 2013

Great-West Lifeco Inc

On my other blog I am today writing about the PEG Ratio...continue...

I do not own this stock Great-West Lifeco Inc. (TSX-GWO, OTC-GWLIF). I have followed this stock for some time. This stock seems to be a favorite with investors who like solid, stable, dividend paying stock. It was on Mike Higgs' list and it used to be on the dividend lists. It is part of Power Financial TSX-PWF), so you probably should not buy both.

This is a life insurance company. All life insurance companies are having difficulties in our current economic climate, especially with the interest rates being kept so low. As with other life insurance companies, this company has not raised their dividends for some time. Before 2009, they were considered to be a dividend growth company. They will probably be again, but when this will happen is a big question.

Prior to 2009, the dividend growth for this company was around 16% per year. The 10 year dividend growth is still good at 10%, but that is because of dividend increases before 2009. Dividends have not increased since 2009.

The Dividend Payout Ratios are still fine on this stock with DPR for earnings at 65% for the 2012 fiscal year. The DPR for cash flow is also fine at around 22% for cash flows.

The Total returns have been bad to just ok over the past 5 and 10 years. The 5 year total return is a loss of 3.3% per year with 4% per year from Dividends and a capital gain loss of 7.3% per year. The 10 year total return is 6.89% per year with 4.59% per year from dividends and 2.38% per year from capital gains.

The outstanding shares have increased by 1.24% and 2.64% per year over the past 5 and 10 years. The shares have increased due to stock options and Share Issues. They have decreased due to Buy Backs. Revenues have increased by 3% and 6% per year over the past 5 and 10 years. Revenue per Share has, of course, not done as well. However, if we look at Revenue per Share using the 5 year running averages, the 5 and 10 year increases are at 5.6% and 4.9%.

Earnings per Share are very good over the past 10 years, but poor over the past 5 years no matter how you look at it. The growth over the past 5 and 10 years, using 5 year running averages, is at 1% and 10.6% per year.

Cash Flow growth is also much better over the past 10 years than over the past 5 years. The 5 and 10 years growth in cash flow per share is 5% per year and 11% per year. The growth in cash flow per share over the past 5 and 10 years using the 5 year running averages is 2.5% and 14% per year.

The Return on Equity for this company has dropped a bit since 2009, but it is still good as it is over 10%. The ROE for 2012 is at 11% and the ROE on comprehensive income is just 5% less at 10.4%.

The debt ratios are fine and are in line with financial companies. The Liquidity Ratio is 1.36, but rises to 2.38 if you include cash flow after dividends. Liquidity Ratio is not really an important one for financial firms. The Debt Ratio is 1.07. The Leverage and Debt/Equity Ratios are 14.43 and 13.43, respectively.

This is still a solid company, but I am not sure when it will grow again. See my spreadsheet at gwo.htm.

This is the first of two parts. Second part will be posted on Friday, September 6, 2013 and will be here.

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.

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 or StockTwits.


  1. I own about 150 shares of PWF, so I don't intend to buy GWO.

    Great analysis as always Susan!


  2. Yes, I also have PWF so I will not be buying GWO. Thanks also for the retweet.