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One of Canada’s large financial holding companies appears to be an attractive dividend investment opportunity, Scotiabank analysts say.
Canadian Electric Power CompanyThe company, which oversees a portfolio of insurance and wealth management businesses, currently offers investors a dividend yield of about 5% and has the potential for significant growth, according to the investment bank.
“We believe Power Corp (POW) offers an attractive combination of value, resilience and a healthy dividend yield over time,” Scotiabank analysts led by Phil Hardie said in a December note to clients. , it will be considered a quality profit compounder.
The financial giant holds a controlling stake daxi life co., ltd. and IGM FinancialAccording to the bank, despite significant strategic progress, it trades at a discount of approximately 26% to its estimated net asset value. Scotiabank believes that this discount should eventually narrow to between 10% and 15% as the company expands its alternative investment platform.
Analysts point to a key driver of Power Corporation’s growth potential as its largest publicly traded subsidiary, Great-West Lifeco, which is expected to raise its earnings growth target at its investor day in April. This development is likely to increase Power Corporation’s dividend growth rate, as Great-West is its largest source of dividend income.
“We believe the value of dividend growth is not reflected in the share price and is undervalued by Wall Street,” the analysts added.
Scotiabank’s price target is C$56 ($40), about 20% above the current share price, with additional upside potential if dividend growth rises. The stock also trades in the U.S.
Recent corporate initiatives support this positive outlook.
The company recently agreed to sell its stake in Peak Achievement Athletics for approximately C$440 million, providing additional capital for potential shareholder returns. Power Corporation has also been actively repurchasing stock, purchasing 3.1 million shares in the third quarter of 2024.
Analysts at Desjardins Securities also noted that Ball “has the means to realize value in the future” while maintaining an attractive dividend yield and trading at a discount to its net asset value.
The investment firm raised its price target to C$49 in November, citing the company’s approximately C$600 million in free cash available for potential share repurchases or other strategic deployments.
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