When it comes to investing for stable returns, Great-West Lifeco (TSX:GWO) offers an intriguing option, particularly with its solid 4.7% dividend yield. As a prominent player in the Canadian financial landscape, Great-West Lifeco has earned a reputation for stability and consistent performance in the insurance and asset management space. With a market cap hovering around $44 billion, investors have good reason to pay close attention. Let’s dive into why Great-West could be a compelling dividend buy for income-seeking investors.
Resilient stock
Over the past year, Great-West has demonstrated resilience, navigating market shifts with a trailing price-to-earnings (P/E) ratio of 11.87. This signals relative affordability. The forward P/E ratio is projected to decrease to 10.37, reflecting investor expectations of continued earnings growth. This favourable valuation is backed by a healthy 12.6% year-over-year revenue growth rate, showing that Great-West Lifeco’s core operations remain robust. Notably, the dividend stock has also maintained a steady price-to-book ratio, standing at 1.75, reinforcing a balanced valuation in line with its assets.
In terms of profitability, Great-West Lifeco shines with an impressive operating margin of 18.69%, thus indicating effective cost management and strong operational efficiency. With a profit margin of 11.32% and a return on equity of 13.21%, it’s clear that the company has been generating substantial shareholder value. This profitability helps sustain its attractive dividend-payout ratio of 54.08%, which aligns well with its annual dividend yield of 4.7%.
Great-West Lifeco has also managed its debt effectively. Currently maintaining a manageable debt-to-equity ratio of 29.61%. While it carries a substantial amount of cash of about $172 billion, the dividend stock’s prudent leverage approach positions it well to weather financial uncertainties. All while still being able to invest in growth opportunities. This balance between risk and reward appeals to long-term, income-focused investors who seek stability.
Looking ahead
For those looking at Great-West Lifeco’s stock performance, the recent trajectory is promising. Trading at around $47.83, GWO is comfortably above its 200-day moving average of $42.83. Thus signalling positive momentum. Plus, the beta of 0.84 reflects less volatility compared to the broader market, thereby making it an appealing choice for conservative investors. While the stock hasn’t reached its 52-week high, it has rebounded significantly from its low, showing resilience and growth potential.
Looking ahead, Great-West Lifeco’s upcoming earnings report will be pivotal for investors assessing its financial health and future prospects. With the financial sector experiencing moderate growth, analysts are optimistic that Great-West Lifeco can capitalize on market opportunities and deliver consistent returns.
Bottom line
Great-West Lifeco’s mix of a strong dividend yield, reasonable valuation, and consistent performance makes it an appealing choice for dividend investors. The dividend stock’s current 4.7% yield is well-supported by stable profitability metrics and a sustainable payout ratio, thus ensuring that income investors can count on steady cash flows. While potential market fluctuations could impact share price, Great-West Lifeco’s conservative balance sheet and global presence offer a safety net. For those focused on building a stable dividend portfolio, the dividend stock is a buy-worthy consideration.
