Since an image is worth a thousand words, I will let the graph below speak for itself. You can see the ownership structure where POW sits at the top.
- Stock Ticker: POW on TSX
- Market Cap.: 11.80B$
- P/E: 15.23
- Forward P/E: 10.35
- EPS: $1.89
- Beta: 0.90
- Quarterly Dividends: $0.29
- Dividend Yield: 4.04%
- Dividend Payout Ratio: 61.38%
- ROE: 7.66%
- 5 Year EPS Growth Average: 9.30%
- 5 Year Dividend Growth Average: 12.63%
- 52-Week Low: $24.98
- 52-Week High: $31.11
- 52-Week Range: 61.01%
Dividend GrowthThis is the graph you like to see as an investor. Over the past 10 years, the dividends have double twice only to flat line over the past couple of years. The flat line over the last 2 years saw POW being dropped from the Canadian Dividend Aristocrats list just like most financial and insurance companies. 2010 was the only year in the past 11 years where they did not raised their dividends as per my graph.
Dividend Payout RatioThe payout ratio has peaked quite a bit over the past 2 years. I am hoping to see a down trend this year otherwise it would signify a slower recover by POW. Both Power Financial (PWF) and Great-West LifeCo (GWO) are exhibiting the same pattern.
EPS GrowthThe EPS growth exhibits the same pattern as most other financial institutions. Earnings dropped over the past few years and is showing sign of growth.
ThoughtsWhen it comes to Power Corporation, the question as an investor should be how much diversification of your holdings do you want to own. Power Corp. controls Power Financial but it only represents 66% of its assets as per the graph. The more you go up the food chain, the less risk you have but you also dilute the impact of all the investments below it. I look at it as a 3 layer investment
POW - Lower risk and slower growthThe current P/E is attractive and the future P/E is even more attractive. A dividend of 4% with a company like POW is really good. Many of these companies have seen price appreciation which lowers the yield in the past year. Interest has grown and many analysts are actually having 'buy' recommendations. I don't put much weight in that, but it certainly can indicate a trend.
PWF - Medium risk and medium growth
GWO / IGM - Higher risk and higher growth
Full Disclosure: At the time of writing, I hold no position in POW, PWF, GWO, or IGM
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