Is it a good company at a reasonable price? This is a well-covered stock and if you are investing for dividends and growth, you should consider at least one life insurance company such as this one. This is a well thought of company. However, analysts do not expect much increase in the stock price this year. It has gone up some 73% since 2022. The price maybe still be reasonable, but it also could be a bit on the expensive side.
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 shareholders have done well with dividends in the past. What might the future hold? This chart is an attempt to show this. If dividends continue to increase by 6.09% as they have in the past 5 years, what you would get in dividends in 5, 10 and 15 years is shown in the Dividends Paid (Div Pd) column. The next column shows what your yield on the stock price at September 19, 2025 of $54.20 would be. The last column shows the percentage of your stock’s price would be covered by dividends in 5, 10 and 15 years.
| Div Pd | Div Yield | Years | At IRR | Div Cov |
|---|---|---|---|---|
| $3.28 | 6.05% | 5 | 6.09% | 104.56% |
| $4.41 | 8.13% | 10 | 6.09% | 220.19% |
| $5.92 | 10.92% | 15 | 6.09% | 375.58% |
If you had invested in this company in December 2014, for $1,007.70 you would have bought 30 shares at $33.59 per share. In December 2024, after 10 years you would have received $515.40 in dividends. The stock would be worth $1,430.10. Your total return would have been $1,945.50. This would be a total return of 7.85% per year with 3.56% from capital gain and 4.29% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $33.59 | $1,007.70 | 30 | 10 | $515.40 | $1,430.10 | $1,945.50 |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.47%. The 5 and 10 median dividend yields are good (5% and 6% ranges) at 5.51% and 5.11%. The historical median dividend yield is also moderate at 3.81%. The dividend growth is low (below 8% per year) at 6.1% per year over the past 5 years. The last dividend increase was in 2025 and it was for 9.9%. The Dividend Payout Ratios (DPR) are fine. The DPR for 2024 for Earnings per Share (EPS) is fine at 52% with 5 year coverage at 57%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is good at 50% with 5 year coverage at 54%. It is best that these ratios be in the 40% range or lower. The DPR for 2024 for Cash Flow per Share (CFPS) is fine at 44% with 5 year coverage is good at 28%. The DPR for 2024 for Free Cash Flow (FCF) is fine at 43% with 5 year coverage is good at 27%. The FCF for 2024 varies from $4,751M to $5,590M.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 52.73% | 57.33% |
| AEPS | 49.55% | 54.33% |
| CFPS | 43.55% | 24.70% |
| FCF | 43.55% | 27.10% |
Debt Ratios are fine, but the company does have a lot of debt. The Long Term Debt/Market Cap Ratio for 2024 is high at 5.55 and currently at 4.93. However, we need also to look at the Long Term Debt/Covering Assets Ratio for 2024 which is good at 0.94 and currently at 0.95 because this is a more important ratio for a Financial. The Liquidity Ratio for 2024 is low at 1.17 and 1.14 currently. If you added in Cash Flow after dividends, the ratios are still low at 1.36 and currently at 1.28. The Debt Ratio for 2024 is fine for a financial at 1.04 and 1.04 currently. The Financial Leverage Ratio for 2024 are fine at 29%.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 5.55 | 4.93 |
| Lg Term A | 0.94 | 0.95 |
| Intang/GW | 0.37 | 0.32 |
| Liquidity | 1.17 | 1.14 |
| Liq. + CF | 1.36 | 1.28 |
| Debt Ratio | 1.04 | 1.04 |
| Fin Leverage | 29% | 29% |
The Total Return per year is shown below for years of 5 to 36 to the end of 2024. 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. |
|---|---|---|---|---|---|
| 2019 | 5 | 6.09% | 12.56% | 7.46% | 5.10% |
| 2014 | 10 | 6.08% | 7.85% | 3.56% | 4.29% |
| 2009 | 15 | 4.02% | 8.21% | 3.89% | 4.32% |
| 2004 | 20 | 6.06% | 6.88% | 2.98% | 3.90% |
| 1999 | 25 | 8.87% | 11.04% | 6.03% | 5.01% |
| 1994 | 30 | 10.89% | 17.76% | 9.95% | 7.81% |
| 1989 | 35 | 10.74% | 15.14% | 9.29% | 5.86% |
| 1988 | 36 | 10.43% | 16.64% | 10.08% | 6.56% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.69, 10.24 and 11.99. The corresponding 10 year ratios are 9.99, 11.52 and 12.81. The corresponding historical ratios are 10.54, 12.39 and 13.72. The current ratio is 13.18 based on a stock price of $54.20 and EPS estimate for 2025 of $4.11. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 8.30, 9.82 and 11.34. The corresponding 10 year ratios are 8.78, 10.20 and 11.97. The corresponding historical ratios are 10.49, 12.29 and 13.30. The current ratio is 11.39 based on a stock price of $54.20 and AEPS estimate for 2025 of $4.76. The current ratio is between the median and the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $55.74. The 10-year low, median, and high median Price/Graham Price Ratios are 0.73, 0.84 and 0.96. The current ratio is 0.97 based on a stock price of $54.20. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive
I get a 10-year median Price/Book Value per Share Ratio of 1.59. The current ratio is 1.87 based on a stock price of $54.20, Book Value of $26.824M and Book Value per Share of $29.01. The current ratio is 18% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 4.98. The current ratio is 11.71 based on Cash Flow for the last 12 months of $1,281M, Cash Flow per Share of $4.63 and a stock price of $54.20. The current ratio is 135% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 3.81%. The current dividend yield is 4.50% based on a stock price of $54.20 and dividends of $2.44. The current ratio is 18% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median dividend yield of 5.11%. The current dividend yield is 4.50% based on a stock price of $54.20 and dividends of $2.44. The current ratio is 12% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10-year median Price/Sales (Revenue) Ratio is 0.73. The current P/S Ratio is 1.30 based on Revenue $38,495M, Revenue per Share of $41.63 and a stock price of $54.20. The current ratio is 79% above the 10 year median ratio. This stock price testing suggests that the stock price is expensive. However, since they seemed to have been changing the account rules for insurance companies for revenue recently, I do wonder how good this test is.
Results of stock price testing is that the stock price is probably reasonable but above the median, but caution is called for. The 10 year dividend yield test says this, that the stock price is reasonable but above the median. However, the historical one differs. I think that this is important as Life Insurance companies had a rough time when interest rates were 0% to negative. I also note that a lot of the testing is showing that the stock price is reasonable, but above the median and expensive.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (1), Hold (6) and Underperform (1). The consensus would be a Buy. The 12 month stock price consensus is $55.73 with a high of $63.00 and low of $45.00. The consensus stock price of $55.73 implies a total return of 7.32% with 2.82% from capital gains and 4.50% from dividends based on a current price of $54.20.
Most analysts like this stock on Stock Chase and think it is a buy. One analyst would like interest rates to go high because insurance companies would benefit from this. Joey Frenette on Motley Fool says insurance stocks are getting overheated, but they are far from expensive. Amy Legate-Wolfe on Motley Fool says great wealth by investing in this stock in your TFSA. The company put out a press release via Newswire about their 2024 annual results. The company put out a press release via Newswire about their second quarter results for 2025.
Simply Wall Street via Yahoo Finance reviews this stock. Simply Wall Street has no warnings out on this stock.
Great-West Lifeco is one of the Big Three Canadian life insurers. The firm operations in Canada, US, Europe (especially in UK and Ireland). Its web site is here Great-West Lifeco Inc.
The last stock I wrote about was about was Wajax Corp (TSX-WJX, OTC-WJXFF) ... learn more. The next stock I will write about will be Granite REIT (TSX-GRT.UN, NYSE-GRP.U) ... learn more on Friday, September 26, 2025 around 5 pm. Tomorrow on my other blog I will write about Wolf and Small Caps.... learn more on Thursday, September 25, 2025 around 5 pm.
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