The stock market rebound helped lead to a 19.4% jump in revenue for this company during the most-recent quarter.
Meanwhile, the company continues to profit from its investments in China and robo-advisors.
The stock trades at just 11.7 times the company’s 2021 earnings forecast.
IGM FINANCIAL INC. (Toronto symbol IGM; www.igmfinancial.com) is Canada’s largest independent mutual-fund provider. Power Corp. owns 61.9% of the fund provider.
The company has two main businesses: Mackenzie Financial sells funds and ETFs through independent brokers; and IG Wealth Management (formerly Investors Group) offers mutual funds and other services, such as portfolio management, through its more than 3,000 affiliated advisors.
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IGM’s fee income rises and falls with the value of the mutual funds and other securities it manages.
Due to the strong recovery in stock values following the March 2020 market downturn. IGM’s assets under management (and advisement) reached a new record high of $271.2 billion as of August 31, 2021. That’s up 37.7% from $196.9 billion on August 31, 2020.
Thanks to those higher assets, as well as strong inflows of new money, IGM’s revenue in the second quarter of 2021 jumped 19.4%, to $843.9 million from $706.6 million a year earlier.
The higher revenue also lifted overall earnings in the quarter by 29.4%, to $237.4 million from $183.5 million. Due to more shares outstanding, per-share earnings rose at a slower pace of 28.6%, to $0.99 from $0.77.
Value Stocks: The company itself is a good investor
IGM also continues to profit from its investments in smaller firms. For example, the company is the largest investor in robo-advisor Wealthsimple. Generally, robo-advisors provide portfolios composed of ETFs tailored to different investor goals. That firm now has 1.23 million clients and $15.3 billion in assets under administration
Wealthsimple recently secured $750 million in new equity financing from a group of private investors. As part of that financing, IGM sold part of its stake for $294 million ($258 million after-tax). It now holds 23% of Wealthsimple, which is worth about $1.15 billion.
IGM also owns 13.9% of China Asset Management Co., Ltd. (China AMC), one of that country’s largest mutual fund sellers. In the latest quarter, that holding contributed $15.1 million to earnings, up 46.6% from a year earlier.
The stock has gained 33% since the start of 2021, yet still trades at a moderate 11.7 times the $3.89 a share that IGM should earn this year. The $2.25 dividend yields a high 5.0%.
IGM’s TSI Dividend Sustainability Rating is Above Average.
Great work Pat i enjoy the information you supply your recommendations//the dividend info, is what i am most interested in being almost 84,,i am getting out of most of my stocks///thank you.[dt].
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Great work Pat i enjoy the information you supply your recommendations//the dividend info, is what i am most interested in being almost 84,,i am getting out of most of my stocks///thank you.[dt].