This Finance Stock up 28% Could Help Secure Your Retirement

This finance stock is a stellar choice if you’re sick of the big banks and want an even bigger passive-income stream.

When you’re thinking long term, like retirement long term, investors want stocks that can hold their ground and quietly do their job. You want stability, income, and a little growth along the way. That’s where finance stocks can really shine, especially those that fly under the radar. One name that deserves a closer look right now is Power Corporation of Canada (TSX: POW).

A glass jar resting on its side with Canadian banknotes and change inside.

Source: Getty Images

The stock

Power stock has had a bit of a bounce lately. It’s up nearly 28% in the last year, now trading around $50. But even with that gain, it still looks undervalued, given what’s under the hood. It has a market cap of about $31.86 billion and a forward price-to-earnings (P/E) ratio of 12.5. That’s not the kind of valuation you usually find in companies this big and this steady.

Power is basically a holding company. It owns big chunks of other companies, most notably Great-West Lifeco and IGM Financial. These businesses focus on insurance, wealth management, and investment services, all things Canadians need in good times and bad. So, while Power Corporation might not be a household name, the companies it owns certainly are.

The numbers

Let’s talk earnings. In the first quarter of 2025, it reported net earnings from continuing operations of $689 million, or $1.07 per share. That’s down a bit from $758 million or $1.17 per share last year. But on an adjusted basis, it’s actually up. Adjusted earnings came in at $787 million, or $1.22 per share, compared to $710 million, or $1.09 per share, in Q1 2024. So, the core of the business is doing just fine.

That’s important if you’re thinking about retirement income. The last thing you want is a dividend that looks good on paper but gets slashed when the economy stumbles. Power Corporation offers a dividend yield of about 4.91% at writing, which is solid. But more importantly, it looks sustainable. This is a company with deep pockets, a strong balance sheet, and dependable earnings from businesses that provide essential services. People don’t stop needing insurance or financial advice just because rates are high.

The growth

And speaking of interest rates, while higher rates have hurt some companies, Power Corporation is built to handle it. Great-West Lifeco, one of its biggest holdings, actually benefits in some ways from higher rates. It earns more on the cash it holds and can generate better returns on its fixed-income investments. That helps balance out any short-term volatility in the markets.

There’s also some growth potential that often gets overlooked. Power Corporation has been investing in alternative asset management through Sagard and Power Sustainable. These businesses focus on private equity, venture capital, and impact investing. That adds a nice future-facing piece to the puzzle and opens up more long-term growth beyond the traditional finance world.

The takeaway

What makes this stock especially interesting for retirement planning is its combination of low valuation, reliable income, and underlying business strength. You’re not betting on flashy innovation or short-term hype. You’re buying into a company that manages other solid companies and returns that value to shareholders in the form of dividends and buybacks.

So, if you’re looking at the market right now and wondering where to put your money for the long run, this might be your moment. Power Corporation is still trading below what many analysts think it’s worth despite its recent rise. It’s not going to offer a dip forever. But if you get in while it still is, you could lock in a reliable source of income for the years ahead. And when it comes to retirement planning, that’s the kind of peace of mind you can’t put a price on.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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