Is it a good company at a reasonable price? The stock price is relatively cheap. If you do not have Power Corp or are no intending to buy it, then if you are building a dividend growth portfolio, this would be a good stock to add for the long term.
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 that the usual site I go to for estimates showed the current Revenue of $64,417M for 2021, but give Revenue estimates of $210,100M and $228,217M for 2023. I went looking elsewhere and got a more reasonable Revenue for 2022 of $66,900M.
If you had invested in this company in December 2011, for $1,020.00 you would have bought 50 shares at $20.40 per share. In December 2021, after 10 years you would have received $730.50 in dividends. The stock would be worth $1,898.00. Your total return would have been $2,628.50.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $20.40 | $1,020.00 | 50 | 10 | $730.50 | $1,898.00 | $2,628.50 |
The dividend yields are good with dividend growth low. The current dividend yield is good (5% to 6% ranges) at 6.24%. The 5 year median dividend yield is also good at 5.24%. The 10 year and historical median dividend yields are moderate (2% to 4% ranges) at 4.62% and 3.49%. You should expect future dividend yields to go back to the moderate range. The dividend growth is low (below 8%) at 5.44% per year for the past 5 years. The last dividend increase was in 2021 and it was for 11.9%.
The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2021 is 54% with 5 year coverage at 58%. The DPR for Adjusted Earnings per Share (AEPS) for 2021 is 52% with 5 year coverage at 55%. The DPR for Cash Flow per Share (CFPS) for 2021 is 16% with 5 year coverage at 20%. The DPR for Free Cash Flow (FCF) for 2021 is 16% with 5 year coverage at 20%.
Debt Ratios are fine. This is a financial stock, so I am looking at Long Term Debt/Covering Assets Ratio and for 2021 it is 0.90. This is fine. I calculate a Liquidity Ratio of 1.37, but this is not an important ratio for financials. 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 33 to the end of 2021. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 5.44% | 6.06% | 1.54% | 4.52% |
| 2011 | 10 | 3.90% | 11.81% | 6.41% | 5.40% |
| 2006 | 15 | 4.53% | 4.54% | 0.78% | 3.76% |
| 2001 | 20 | 7.96% | 8.58% | 4.06% | 4.51% |
| 1996 | 25 | 10.53% | 14.45% | 8.18% | 6.27% |
| 1991 | 30 | 11.86% | 18.26% | 10.76% | 7.50% |
| 1988 | 33 | 10.73% | 16.73% | 10.29% | 6.44% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.05, 10.46 and 11.86. The corresponding 10 year ratios are 10.80, 12.36 and 13.43. The corresponding historical ratios are 10.80, 12.41 and 12.81. The current ratio is 9.27 based on a stock price of $31.42 and EPS estimate for 2022 of $3.39. The current ratio is below the low of the 10 year ratio. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.88, 10.26 and 11.97. The corresponding 10 year ratios are 10.51, 12.10 and 13.27. The current P/AEPS Ratio is 8.70 based on a stock price of $31.42 and AEPS estimate for 2022 of $3.61. The current ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $45.08. The 10-year low, median, and high median Price/Graham Price Ratios are 0.85, 0.96 and 1.06. The current P/GP Ratio is 0.70 based on a stock price of $31.42. The current ratio is below the low of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Book Value per Share Ratio of 1.71. The current P/B Ratio is 1.18 based on a stock price of $31.42, Book Value of $24,792M and Book Value per Share of $26.64. The current ratio is 31% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Cash Flow per Share Ratio of 4.98. The current ratio is 2.55 based on Cash Flow per Share for the last 12 months of $11,471M, Cash Flow per Share of $12.33 and a stock price of $31.42. The current ratio is 49% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 3.68%. The current dividend yield is 6.24% based on dividends of $1.96 and a stock price of $31.42. The current dividend yield is 70% below the historical median dividend 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 6.24% based on dividends of $1.96 and a stock price of $31.42. The current dividend yield is 35% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 0.72. The current P/S Ratio is 0.44 based on Revenue estimate for 2022 of $66,900M, Revenue per Share of $71.89 and a stock price of $31.42. The current ratio is 39% 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. The dividend yield tests are saying the stock price is cheap and it is confirmed by the P/S Ratio test. All the tests are pointing to a cheap price.
When I look at analysts’ recommendations, I find Buy (2), Hold (7) and Underperform (1). The consensus would be a Hold. The 12 month stock price consensus is $36.80. This implies a total return of $23.36% with 17.12% from capital gains and 6.24% from dividends based on a current stock price of $31.42.
There are various views on Stock Chase by analysts. Some like it like it and some do not. Life Insurance companies need higher interest rates. Stock Chase give this stock 4 stars out of 5. Money Sense rates gives this stock an A rating. Ambrose O'Callaghan on Motley Fool says this company will give you income and capital growth. Adam Othman on Motley Fool thinks this company has an edge because it also into investment management. The company put out a News Release on their fourth quarter of 2021 results. The company put out a News Release on their second quarter of 2022 results. Simply Wall Street on Yahoo Finance talk about who owns this company. Short answer is Power Corp. They have no warning signs.
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 Granite REIT (TSX-GRT.UN, NYSE-GRP.U) ... learn more on Friday, September 23, 2022 around 5 pm. Tomorrow on my other blog I will write about Tara Henley Substack.... learn more on Thursday, September 22, 2022 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.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
This comment has been removed by the author.
ReplyDeleteBuy Intact instead - pure insurance. GWO is not a good company. No growth over long term history. Retiree stock for divy only.
ReplyDelete