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 Corp. (TSX-POW). Great West Lifeco Inc. is one of the companies under Power Corp. (TSX-POW).
When I was updating my spreadsheet, I noticed what difference there was in Yield after a number of years if people paid the high, median, or low price when stock was bought. So, if this stock was bought 10 years ago and at purchase time the low price 10 years ago was paid, then the current shareholder would be getting a yield of 7.38% on the purchase price.
| Years | High Price | Med Price | Low Price |
|---|---|---|---|
| 5 | 4.67% | 5.09% | 5.60% |
| 10 | 6.01% | 6.62% | 7.38% |
| 15 | 5.73% | 6.11% | 6.54% |
| 20 | 9.47% | 13.04% | 20.91% |
| 25 | 48.73% | 55.62% | 64.77% |
| 30 | 81.25% | 115.60% | 200.23% |
I also noticed the stock price coverage after a number of years if people paid the high, median, or low price when the stock was bought. So, if this stock was bought 10 years ago and at purchase time the low price 10 years ago was paid, then the current shareholder would have covered by dividends 59.15% of the stock price.
| Years | High Price | Med Price | Low Price |
|---|---|---|---|
| 5 | 20.82% | 22.70% | 24.95% |
| 10 | 48.12% | 53.07% | 59.15% |
| 15 | 64.43% | 68.64% | 73.45% |
| 20 | 122.18% | 168.18% | 269.73% |
| 25 | 660.53% | 753.84% | 877.86% |
| 30 | 1120.16% | 1593.63% | 2760.40% |
The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.49%. The 5, 10 and historical median dividend yields are also moderate at 4.97%, 4.62% and 3.57%. The dividend increases are low (below 8%). The dividend increases for the past 5 years is at 6.08% per year. The last dividend increase was in 2020 and it was for 6.01%. There has not been an increase in dividends in 2021. This company has increased dividends in 22 of the last 32 years.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 is 55% with 5 year coverage at 58%. The DPR for Cash Flow per Share is 16% with 5 year coverage at 21%. The DPR for Free Cash Flow is 17% with 5 year coverage at 21%.
Debt Ratios are fine. The Long Term Debt/Asset Coverage Ratio is 1.00 for 2020 and is better currently at 0.91. You want long term debt to be cover (i.e., ratio at 1.00 or less) by long term assets. Also, the Liquidity Ratio is not important for financial, but I have calculated it anyway at 1.73. The Debt Ratio is 1.05 and this is fine for a financial.
The Total Return per year is shown below for years of 5 to 32 to the end of 2020. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2015 | 5 | 6.08% | 2.20% | -2.55% | 4.74% |
| 2010 | 10 | 3.60% | 6.32% | 1.40% | 4.92% |
| 2005 | 15 | 5.28% | 4.11% | -0.08% | 4.19% |
| 2000 | 20 | 8.79% | 6.91% | 2.48% | 4.42% |
| 1995 | 25 | 11.32% | 16.55% | 8.91% | 7.64% |
| 1990 | 30 | 11.75% | 18.25% | 10.47% | 7.78% |
| 1988 | 32 | 10.98% | 16.61% | 9.85% | 6.76% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 11.07, 12.39 and 13.72. The corresponding 10 year ratios are 10.80, 12.36 and 13.43. The corresponding historical ratios are 11.07, 12.43 and 13.91. The current P/E Ratio is 12.01 based on EPS estimate for 2021 of $3.25 and a stock price of $39.04. The current ratio is between the low and median value of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This is a good test because the P/E Ratios have not changed that much during time.
I get a Graham Price of $41.67. The 10 year low, median, and high median Price/Graham Price Ratios are 0.85, 0.97 and 1.07. The current P/GP Ratio is 0.94 based on a stock price of $39.04. The current ratio is between the low and median 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Book Value per Share Ratio of 1.72. The current P/B Ratio is 1.64 based on a Book Value of $22,031M, Book Value per Share of $23.74 and a stock price of $39.04. The current ratio is 4% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Cash Flow per Share Ratio of 4.98. The current P/CF Ratio is 3.99 based on the last 12 months Cash Flow of $9,077M, Cash Flow per Share of $9.78 and a stock price of 39.04. The current ratio is 19.8% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 3.57%. The current dividend yield is 4.49% based on a stock price of $39.04 and dividends of $1.75. The current dividend yield is 25.7% below the historical median yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 4.62%. The current dividend yield is 4.49% based on a stock price of $39.04 and dividends of $1.75. The current dividend yield is 4.6% below the 10 year median yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 0.74. The current P/S Ratio is 0.54 based on a stock price of $39.04, Revenue estimate for 2021 of $66,951M and Revenue per Share of $72.16. The current ratio is 26% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is cheap to reasonable and below the median. One dividend yield test says cheap and the other reasonable and below the median. The P/S Ratio says it is cheap. Most of the other testing is say the stock price is reasonable and below the median.
Is it a good company at a reasonable price? I think that the stock price is reasonable. I also think it is a good company, but until we have more normal interest rates, it is hard for Life Insurance companies to provide a good return. However, dividends have been good during these trying times. First interest rates sky rocketed and Life Insurance companies had to change the way they did business and now the interest rates are lower than they have ever been historically.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (1), and Hold (9). The consensus would be a Hold. The 12 month stock price consensus is $40.00. This implies a total return of 6.95% based on a stock price of $39.04 with 2.46% from capital gains and 4.49% from dividends.
The last entry on Stock Chase the analyst thinks that you should do a partial sell if you own this stock. Other entries say the stock is a buy. Amy Legate-Wolfe on Motley Fool thinks this is a good dividend stock to buy now. The executive summary on Simply Wall Street lists one risk and 3 rewards with this company. A writer on Simply Wall Street is disappointed in the lack of growth in earnings but thinks the stock has positive factors. A writer on Simply Wall Street talks about insider trading at this company.
Great-West Lifeco is one of the three big Canadian life insurance firms. With just under half of the firm's profit and revenue in Canada, Great-West also operates in the U.S. and Europe. Its web site is here Great-West Lifeco Inc.
The last stock I wrote about was about was Trican Well Service Ltd (TSX-TCW, OTC-TOLWF) ... learn more. The next stock I will write about will be Alcanna Inc (TSX-CLIQ, OTC-LQSIF) ... learn more on Friday, September 17, 2021 around 5 pm. Tomorrow on my other blog I will write about Successful Investing.... learn more on Thursday, September 16, 2021 around 5 pm.
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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