Investors watching the Canadian financial sector scene have likely seen a standout performer: Power Corporation of Canada (TSX:POW) stock. This financial services conglomerate has been on a tear, delivering a stunning 187% in total returns for shareholders over the past five years. Yet, despite this incredible run, a compelling case can be made that the stock remains strangely cheap. This paradox sits at the heart of the investment debate in September 2025. So, what’s the deal? Is it time to buy, sell, or hold POW stock?
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Power Corporation stock’s narrowing conglomerate discount
The impressive story at Power Corporation of Canada isn’t just about a market-beating past performance; it’s about a fundamental transformation. For years, Power Corp. has traded at what’s known as a “conglomerate discount.” This is a Bay Street term meaning the market values the sum of the company’s parts for less than they are actually worth. Power Corp.’s leadership, led by CEO R. Jeffrey Orr, is on a mission to eliminate most of the discount. The conglomerate discount has since narrowed from more than 35% in 2015 to under 15% by June 2025.
Power Corporation’s strategy is one of simplification. The old, complex organizational structure has been dismantled to make the value proposition crystal clear. Management is relentlessly focused on enhancing shareholder value by increasing the transparency and market recognition of the conglomerate’s high-quality assets. Spin-offs and strategic repositioning of core holdings are tangible strategies the company has executed to improve the operating efficiency of its business model.
At its heart, the simplified Power Corporation is a story of three powerful pillars. First, there is its controlling stake in Great-West Lifeco, a titan in insurance and financial services. Then there is IGM Financial, a wealth management powerhouse behind brands like Investors Group and Mackenzie Investments. Finally, there is a growing portfolio of alternative assets and fintech investments. The market has historically struggled to value this diverse business mix, applying a blanket discount. But as the structure becomes cleaner, that discount is poised to shrink, potentially unleashing significant value for patient shareholders through market-beating capital gains.
POW’s appeal to income investors
For income investors, Power Corporation of Canada stock is more than a growth story; it’s a good dividend stock to buy and hold for passive income. The stock currently boasts an attractive dividend yield of 4.3%, but investors who acquired shares five years ago are harvesting yields above 9% annually, thanks to Power Corp.’s commitment to raising dividends every year to generously enrich its shareholders.
POW has raised dividends at an average growth rate of 7.4% annually over the past three years, including a 9% dividend bump for 2025. The payout remains well covered by earnings, given an average payout rate of around 55%.
The dividend is a cornerstone of the total return proposition, offering a steady stream of income while you wait for the market to fully appreciate the company’s intrinsic value.
An undervalued dividend stock
Speaking of value, POW stock’s numbers are persuasive. Shares trade at a significant 11% discount to their most recent Net Asset Value (NAV), which is a calculation of what its underlying holdings are worth.
What’s more, its forward price-to-earnings (P/E) ratio of 10 also appears reasonable relative to both its history and industry peers. The financial sector powerhouse’s combination of growth, income, and value is a rare find, supporting a strong case for Power Corporation stock being a top dividend stock to buy and hold in a long-term portfolio.
Buy, Sell, or Hold?
So, what’s the verdict for September 2025? The momentum behind Power Corp.’s simplification journey is undeniable. Management is executing its plan with precision, and the recent financial results show underlying businesses that are performing well.
Holding seems prudent for investors who bought earlier, as there may be more value to be realized. For those considering a new position, any market-wide weakness could provide an attractive entry point into a company that is actively working to close the gap between its market price and true worth. To avoid timing the market, I’d buy the stock anyway, and winning stocks usually keep winning.
