Power Financial Corp (PWF.TO)

It pays a good dividend, but interest rates are risingand that will hurt this. If you can withstand the volatility in this stock, you'll still receive that dividend. Consider a stop loss.

It is a holding company. The dividend is safe. Trading in line to the value of the assets underlying namely Great-West Life (GWO-T) and the rest is Mackenzie Financial and Investors Group. Would you want to own a Mutual Fund company now? ETFs are destroying them. The individual pieces are not particularly attractive.

The underlying components of the mutual fund side of the business have been under significant pressure, he says. The market is looking forward and sees the mutual fund business lacking the ability to create growth. Yield 5.6%.

Very frustrating name that hasn’t done much in terms of capital appreciation. Model to grow their earnings at 9% over their forecast horizon. Trading at 9.3 times earnings. They own 80% of Great-West Life (GWO-T) and the rest is Mackenzie Financial and Investors Group. Steady eddy that is not going to hurt you.

They've had a pullback. He's worried that interest rate rises will hit dividends, including this stock. He wouldn't chase it now, especially if you're a retiree. Instead look at bonds and convertibles and stay away from blue-chips like this.

(A Top Pick June 16/17, Up 2% ) Sold it early April. This was a growth company until recently, but since the financial crisis has done very little and not much to improve shareholder values. Management is competent but nothing special. The Desmarais sons haven’t proven themselves and haven’t done as well as their father and they still have a lot of influence in the company.

(A Top Pick Apr 21/17, Down 2.09%) This is the Canadian vacuum. The reason for buying is still all intact. It is being ignored because of NAFTA concerns. Value will really surface.

POW and PWF: Recent reports were in-line. Not exciting stocks in the financial sector. The dividends are attractive, but don't expect huge upside on the share price.

Owns Sunlife and Manulife instead. PWF is Challenged by slower growth. Are increasing their dividend. Doesn't expect it to outperform the market. A good hold, but don't put new money into it.

A common complaint is that it's been trading in a narrow range for many years, despite great assets like Great West Life. They're challenged by their mutual fund operation which has been challenged by low-cost ETFs. Over time, expect to see occasional dividend increases. Don't expect much capital appreciation, but that yield should continue.

Power Corp (POW-T) vs Power Financial (PWF-T). He owns Power Financial. Power Corp is the parent. It has been a disappointing stock. PWF owns Great West Life (GWO-T) and IGM-T and a European investment company. GWO has been the drag on Power Financial due to a poor acquisition of a US investment company and some poor European investments. He still owns Power Financial and hopes they will return to twice yearly dividend increases (which stopped following the financial crisis). Yield 4.98%.

The 2 biggest parts of this are Great West Life (GWO-T) and Investors Group (IGM-T). Investors Group is the largest mutual fund company in Canada. Mutual fund fees are coming under pressure because of more transparency and disclosure. That is going to put a bit of a cap on this. It is controlled by a family, and he doesn't buy companies that have 2 classes of shares. Dividend yield of 4.9%.

The inverse to the rising interest rate question is life insurance companies, of which this company owns one. As interest rates go up, liabilities out in the future that they have to pay off, get smaller. This company is giving you almost 1.5X dividend yield over the rest of the sector. The problem is that Great West Life (GWO-T) is not the best of the lifecos. However, IGM Financial has the highest fee structure and has been a great money-maker, and the demographics are really great for wealth management. However, it’s an area where they could lose significant market share. There are better places in the sector.

Cash, Power Financial (PWF-T) or Power Corp. (POW-T)? These are very different propositions. It depends on what else you own in your portfolio. Power would not be his pick of where to go in the financial space. Having cash at this point makes sense. Given how much markets have run up, you have to have a mechanism of being able to play some defence, so Cash would be his first pick at of these choices.

(A Top Pick Jan 19/17. Up 9%.) The fact that the values of insurance companies don’t seem to be going anywhere, makes him wonder if he is really interested in this company or not.