Great-West Lifeco Inc.

On my other blog I am today writing about possible cheap dividend stocks for October 2015 learn more...

Sound bite for Twitter and StockTwits is: Dividend growth insurance stock. I think of this stock still as a dividend growth one. The 2008 recession was hard on a lot of financial stocks. I do not think that this stock is going to back to the high dividend increases of this in the near future. We are not really out of the 2008 recession yet. See my spreadsheet on Great-West Lifeco Inc.

I do not own this stock of Great-West Lifeco Inc. (TSX-GWO, OTC-GWLIF). 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. I have been following this stock for some time. However, I will not buy it because I have Power Financial Corp. (TSX-PWF). Great West Lifeco Inc. is one of the companies under the Power Financial Corp. and Power Corp. (TSX_POW).

This stock used to have moderate dividends and good dividend increases. That is dividends around 2.85% and increases around 20% per year. As with a lot of financials, especially insurance company, this company stopped rising dividends in 2008. This year, 2015 is the first year for this to raise their dividends since 2008. The increase was for 6%. This stock has been a dividend growth stock in the past and I am sure it will be one in the future, But it may be a while before we see the kind of dividend increases this stock used to provide.

They have not done badly with Dividend Payout Ratios. The DPR for EPS for 2014 was 48.3% and for CFPS was 36.2%. The corresponding 5 year median DPRs are 58.2% and 44.2%. The current dividend is relatively high for this stock at 4.1%.

If you had bought this stock 5, 10 or 15 years ago and paid a median price, you would be earnings 4.9%, 4.6% or 9.7% on our original investment. The median price 10 years ago was relatively high and that is why the 10 years dividend yield is lower than the 5 year dividend yield. Also dividends would have paid by 24%, 41% or 110% of your original investment over these periods. So people who hold this stock and paid a relative median price for it would have done well.

Outstanding shares have increased by 1.1% per year over the past 5 and 10 years. Revenue growth is moderate. Earnings growth is moderate to good. Cash Flow growth is moderate.

The Revenue has increased by 5.1% and 6% per year over the past 5 and 10 years. Revenue per Share has grown by 4% and 4.8% per year over the past 5 and 10 years. Revenue is expected to drop by 7.3% in 2015. If you compare at the 12 month period to the end of 2014 and to the end of the second quarter of 2015, Revenue is down by 7.9%.

EPS is up by 8.2% and 3.7% per year over the past 5 and 10 years. Analysts expect EPS to grow by 7.2% in 2015. If you compare at the 12 month period to the end of 2014 and to the end of the second quarter of 2015, EPS is up by 6.2%.

The 5 and 10 year growth for Cash Flow is 6.6% and 6.1% per year. The 5 and 10 year growth for CFPS is 5.5% and 4.9% per year. Analysts expect Cash Flow to growth by 15% in 2015. If you compare at the 12 month period to the end of 2014 and to the end of the second quarter of 2015, Cash Flow is down by 2.9%. So, cash flow is not yet going in the expected direction.

The Return on Equity for 2014 was 14.5% and the 5 year median ROE is 12.6%. The ROE has been over 10% each of the previous 5 years and was below it just once over the past 10 years with 2008 having an ROE of 9.3%. The ROE on comprehensive income for 2014 was 16.8% and its 5 year median is 14.6%. This suggests that the Earnings are of good quality.

The Liquidity Ratio has varied a lot and for 2014 it was just 104, but it has a 5 year median of 1.36. Liquidity Ratio is not of much importance for financial stock. The Debt Ratio is also low at 1.07, but this is a good ratio for a financial stock. The Leverage and Debt/Equity Ratios are rather high, even for a financial stock at 20.28 and 19.04.

This is the first of two parts. The second part will be posted on Tuesday, October 6, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

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 Inc.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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