When it comes to new investors, many want to run into investing like it’s a race. But investing is far more like a marathon. You want to find long-term holds that can provide you with long-term income through dividends and returns. And that can mean finding low-risk options to start off with.
However, low-risk investors face the exact opposite problem. They might be more wary of the market and miss out on opportunities because of it. This can hurt you in the long run, as you won’t invest as much, and this can lead you to lower overall portfolios for your retirement and other investment goals.
This is why we’re going to look at the best of both worlds with iA Financial (TSX:IAG): an insurance company that can be the best for low-risk investors wanting more.
What makes a stock low risk?
As you start considering a low-risk stock, you’ll want to look to a few keys in order to discover whether that company can provide you with low-risk growth but growth nonetheless. So, let’s go over some of the key factors influencing your decision.
First, is the industry in which the stock trades stable? If it’s an essential area, this could mean it’s lower risk compared to other higher-risk industries like tech. Then there’s the company’s overall financial health and whether earnings grow steadily over time with strong fundamentals.
From there, look at the company’s market position relative to competitors and the regulatory environment in which it operates. Furthermore, how might the company be influenced by global economic fluctuations?
Finally, look at the stock’s dividend history and volatility to determine how it might react under any stressful market scenario. In this case, let’s see how IAG stock stacks up.
Considering IAG stock
IAG stock trades within the stable insurance industry, as people and businesses require insurance coverage regardless of economic conditions. It also provides financial services, including asset management, wealth management, and banking. These are also essential sectors for both individuals and businesses.
Furthermore, IAG stock is one of the largest insurance and wealth management companies in Canada. Offering a wide range of products, it has grown to hold a strong position in Canada and continues to expand its offerings. However, it’s mainly focused in Canada, which could leave the door open for more growth elsewhere. Meanwhile, it does see more influence from a low-performing Canadian economy.
In terms of volatility and its financial position, IAG stock continues to perform well. It offers a 3.88% dividend yield while trading at 10.99 times earnings. Its return on equity is at 11.14%, which is around the average of the TSX 60. There’s very little debt on hand, and it holds a steady 39.71% dividend payout ratio.
Bottom line
With a strong dividend yield, stable earnings growth, and stable returns over the last several years, IAG stock looks like a great investment for low-risk investors. If you want to see more growth but lower risk, it’s certainly one to consider on the TSX today.
