If you have been watching Great-West Lifeco (TSX:GWO) lately, you know it has been a bit of a wild ride. It started the year with a strong rally, rising more than 18% in the first quarter, giving investors a sense of renewed momentum. But that optimism has been tested as GWO stock gave up 10.5% in the second quarter, trimming its year-to-date gains to just under 6%.
At $50.47 per share and a market cap of $46.8 billion, Great-West stock is holding steady for now. What might make it appealing to income-focused investors is its 4.8% dividend yield, which has climbed as the share price has dipped recently. While some may see the recent pullback as a warning, I view it as a rare chance to buy a dividend giant at a fair value.
In this article, I’ll break down the key fundamentals behind the recent swings in Great-West’s share price, and what could influence its outlook over the next three years.
What’s behind the recent swings in GWO stock
In the first quarter of 2025, the company delivered strong base earnings growth, especially in its U.S. retirement and wealth segments. But while that would normally push shares higher, the broader market tone was far from stable.
One of the factors that may be weighing on GWO stock this quarter is a combination of one-off challenges and mild investor caution. There were a few headwinds like write-downs on mortgage loans and a wildfire-related provision of $21 million.
Another piece of the puzzle is macroeconomic headwinds. Great-West’s latest earnings call hinted at persistent market volatility and pressure from real estate asset returns.
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Digging into recent financial momentum
Despite some short-term jitters, Great-West Lifeco’s long-term financial growth trend still looks promising. The company’s quarterly base earnings rose 5% YoY to $1 billion. This reflected not just its operational strength but also a more capital-efficient mix, especially in its U.S. business where base earnings jumped 13% from a year ago.
Similarly, Great-West’s book value per share also rose 12% YoY last quarter, and its total client assets crossed the $3 trillion mark.
Where will Great-West Lifeco stock be three years from now?
So, what could GWO stock look like a few years down the road?
Judging by its current approach, Great-West Lifeco is laying the base for more stable and profitable growth ahead. One of the biggest factors that could work in its favour is how much it has leaned into expanding its higher-margin retirement and wealth businesses. These areas not only bring in stable revenue but also rely less on volatile markets, which should make its business model more resilient.
Great-West Lifeco is also investing smartly. It continues to grow its U.S. footprint, where capital-light strategies and digital enhancements are helping improve its efficiency and scale. With $2.5 billion in cash, the company has the cushion it needs to navigate whatever comes next. And that makes its current dip look more like a well-timed opportunity than a warning sign.
