GREAT-WEST LIFECO INC. $35(Toronto symbol GWO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 993.4 million; Market cap: $34.8 billion; Price-to-sales ratio: 1.0; Dividend Yield: 3.9%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) is Canada’s second-largest insurance company, after Manulife Financial (Toronto symbol MFC). It also offers mutual funds, retirement planning and wealth management. Power Financial (Toronto symbol PWF) owns 71.4% of Great-West.
As of December 31, 2015, the company had $1.2 trillion of assets under administration, up 14.0% from a year earlier.
Great-West gets 43% of its earnings from Canada, where it operates under well-known labels Great-West Life, Canada Life and Freedom 55. The European division (42% of earnings) mainly sells group insurance and annuity products in the U.K., Ireland and Germany.
In the U.S. (15% of earnings), Great-West is a leading provider of employer-sponsored retirement savings plans. It also owns mutual fund firm Putnam Investments.
Great-West continues to profit from two recent acquisitions.
In July 2013, it paid $1.75 billion for Ireland’s largest pension manager and life insurance provider- —Irish Life. In July 2015, it paid an undisclosed sum for the Irish operations of Legal & General Group plc. It provides investment and tax-planning services to wealthy individuals.
In 2015, Great-West’s earnings rose 8.5%, to $2.8 billion, or $2.77 a share, from $2.55 billion, or $2.55, in 2014. Higher earnings from Europe and the U.S. offset lower earnings in Canada. Due to losses on its investment portfolio, revenue fell 13.7%, to $33.8 billion from $39.2 billion.
The company recently raised its quarterly dividend by 6.1%, to $0.346 from $0.326. The new annual rate of $1.38 yields 3.9%. The stock trades at just 11.9 times Great-West’s forecast 2016 earnings of $2.93 a share.
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