On the surface, Power Financial Corp (TSX:PWF) looks to be a very simple company.
It has three main parts. The first is a 61.5% stake in IGM Financial (TSX:IGM). This is worth $6 billion based on current market values.
The second is a 67.9% ownership position in Great-West Lifeco (TSX:GWO), one of Canada’s largest life insurers. This is worth $23.9 billion based on today’s prices.
And finally, it owns 50% of a European holding company called Parjointco, which owns 55.5% of another company called Pargesa. That stake is worth $1.8 billion.
The company also has some other assets, including a 59.8% stake in Wealthsimple, one of Canada’s largest roboadvisors.
Combined, Power Financial’s assets are worth $31.7 billion, while the stock has a market cap of $24.2 billion. That’s a big discount even after factoring in other forms of equity like preferred shares.
Not only are investors getting that discount; they’re also getting one of the best yields in the financial industry as a consolation prize for waiting. Shares each pay a $0.39 quarterly dividend, good enough for a 4.7% yield.
The payout ratio is solid as well. Power Financial earned $2.56 per share in the last 12 months. It paid out $1.56 in dividends. That’s a payout ratio of 61%.
In an a world where it appears Donald Trump will be good for financials, it’s easy to see Power Financial and its diverse holdings doing well. Perhaps the company will finally close the gap between the value of its assets and the value of the equity.
