Earnings fell 3.9% in the most recent quarter, but assets under administration rose 6.3% as investors flooded back into stocks.
This market-leading firm is a great choice for dividend income because lower interest rates should increase demand for the company’s mutual funds.
IGM FINANCIAL INC. (Toronto symbol IGM; www.igmfinancial.com) is Canada’s largest independent mutual-fund provider with $147.5 billion in assets under management and $168.5 billion in assets under administration as of March 31, 2020. Power Corp. owns 62.1% of the fund provider.
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In February 2020, the company’s clients contributed $650.4 million more to its mutual funds and ETFs than they took out, mainly due to RRSP contributions ahead of the March 2 deadline. Net new money at IG Wealth Management (formerly Investors Group) and Mackenzie Financial offset a drop at Investment Planning Counsel.
In the quarter ended March 31, 2020, IGM’s revenue fell 0.9%, to $782.1 million from $789.1 million a year earlier. An increase in net sales of mutual funds at the IG Wealth Management and Mackenzie Investments divisions was offset by lower earnings from its 4% equity stake in Great-West Lifeco.
Overall earnings fell 3.9%, to $160.9 million from $167.5 million. Due to fewer shares outstanding, earnings per share declined 2.9%, to $0.68 from $0.70.
Value Stocks: Low interest rates will help future growth
After a big decline in March, IGM’s assets under management bounced back nicely in April, rising by 6.3% to $152.2 million.
Falling stock values will continue to weigh on IGM’s assets under administration. However, low interest rates on savings accounts and bonds should prompt investors to put more money into its mutual funds and ETFs, particularly when the coronavirus crisis eases.
IGM last raised its quarterly dividend by 4.7% with the January 2015 payment. Investors receive $0.5625 per share for an annual rate of $2.25. It yields a high 7.0%.
IGM’s TSI Dividend Sustainability Rating is Above Average.
Recommendation in Dividend Advisor: IGM Financial Inc. is a buy.
Comments
Shiv
IGM has a good dividend yield. Another, similar stock, is Alliance Bernstein (AB), which also offers multiple mutual funds like IGM and currently has a 9.5% dividend yield.
Hi, Shiv. Pat looks at competitors like Alliance in analyzing IGM for every update. Alliance is likely to appear in an upcoming Inner Circle Q&A. Thanks.
Hi Patrick. I question why TSI would recommend IGM Financial Inc when all your philosophy points to not using mutual funds because of their built-in biases to their own bottom line. If mutual funds are kind of immoral then why should we support them by purchasing their units? Let’s starve them out by NOT buying into them. John Struyk
Thanks for your comment. A while back, we moved away from recommending mutual funds in favour of lower-fee exchange-traded funds (ETFs). So we feel that most fund investors should shift into ETFs wherever possible. (For that reason, we shifted our focus in Canadian Wealth Advisor to ETFs.) However, we see mutual funds as okay to hold if you want own them – and IGM Financial is a great way for investors to profit from its leading role in that market in Canada.
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IGM has a good dividend yield. Another, similar stock, is Alliance Bernstein (AB), which also offers multiple mutual funds like IGM and currently has a 9.5% dividend yield.
Hi, Shiv. Pat looks at competitors like Alliance in analyzing IGM for every update. Alliance is likely to appear in an upcoming Inner Circle Q&A. Thanks.
Hi Patrick. I question why TSI would recommend IGM Financial Inc when all your philosophy points to not using mutual funds because of their built-in biases to their own bottom line. If mutual funds are kind of immoral then why should we support them by purchasing their units? Let’s starve them out by NOT buying into them. John Struyk
Thanks for your comment. A while back, we moved away from recommending mutual funds in favour of lower-fee exchange-traded funds (ETFs). So we feel that most fund investors should shift into ETFs wherever possible. (For that reason, we shifted our focus in Canadian Wealth Advisor to ETFs.) However, we see mutual funds as okay to hold if you want own them – and IGM Financial is a great way for investors to profit from its leading role in that market in Canada.