Great West Lifeco Deserves A Look From Dividend Investors

Insurance and wealth-management company Great-West Lifeco Inc. recently reported that its second-quarter profit more than doubled due to a large gain connected to the sale of its U.S. health care business.

Even without the gain, Great-West’s results exceeded expectations set by the street. Most importantly for us dividend growth investors, Great West Lifeco managed to raise its dividend by 5 per cent to 30.75 cents a share in spite of a tough financial environment.  The inherent profitability, due to more conservative and principal guaranteed investments, is one of the reasons that I was touting insurance companies back at the beginning of the “Bank meltdown”.

Following the announcement, the company’s shares increased by 3.1 per cent to $29.82 on the Toronto Stock Exchange later in the session .

Financial Highlights

Net income in the April-June quarter was $1.21-billion, or $1.36 a share, the company said. That was up from $544-million, or 61 cents a share, in the same 2007 period.

Excluding the $649-million gain on the U.S. health care business, adjusted net income was $564-million, or 63 cents a share, up 4 per cent from a year earlier.

Analysts expected that the company would announce a profit of 61 cents a share, at least  according to the estimates by Reuters.

In its Canadian business alone, the net income increased 7 per cent to $275-million.

With a Dividend yield of 3.94% and a Beta of just 0.47, Great West Lifeco could be an investors dream stock in a rocky market.

Couple those two statistics with an average dividend growth rate of 17.5% over the last 5 years and a payout ratio of less than 50% and we have a fantastic candidate for a long-term dividend growth portfolio.

Company Quick Facts

Great-West has various insurance and asset-management companies in Canada, the United States, Europe and Asia and is a is a financial services holding company with interests in the life insurance, health insurance, retirement savings, investment management and reinsurance businesses.

Great-West is controlled by Power Financial Corp., a Montreal-based financial holding company that is also one of my favorite non-bank Canadian dividend stocks.

Affiliate Best Options

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OMB to issue guidance on purchase cards

The Office of Management and Budget will issue a memorandum to agency leaders early this week emphasizing and clarifying existing requirements for the use of government purchase cards.

Comment on this article in The Forum.The memo comes on the heels of a Government Accountability Office report that found nearly 41 percent of $14 billion in transactions were not properly authorized or signed for by an independent third party. GAO's sample of transactions more than $2,500 concluded that 48 percent of purchases did not properly comply with federal rules to deter fraud.

GAO recommended that OMB director Jim Nussle issue memoranda reminding agencies of existing controls over purchase card activity, and agency officials said in a conference call last week they would do that. According to the watchdog agency, breakdown of internal controls "resulted in numerous examples of fraudulent, improper and abusive purchase card use." GAO's examples included instances where cardholders purchased Internet dating services, iPods and lingerie.

"What we've taken from this [report] is that we need to do a better job of working with agencies to get them to adhere to the policies that exist," said Clay Johnson, OMB deputy director for management. "On top of that there are certainly opportunities to strengthen some of these policies and put some of them into law."

Johnson and Danny Werfel, acting controller of OMB's federal financial management office, said they are working with lawmakers, in particular Sen. Charles Grassley, R-Iowa, to expand existing OMB requirements into law.

"Once they're law, there's the ability to create stiffer penalties for misuse than are in OMB regulations, so we welcome Congress' help and partnership in building those stiffer penalties into the process," Werfel said.

Legislation to that effect, the 2007 Government Credit Card Abuse Prevention Act (S. 789), introduced by Grassley, passed the Senate Homeland Security and Governmental Affairs Committee last Thursday. A companion bill in the House, H.R.1395, awaits review by the Oversight and Government Reform Subcommittee on Government Management, Organization, and Procurement.

In the official written response to GAO's report, OMB officials agreed that the purchase card program will not be as efficient as it could be unless agencies implement strong and effective controls to prevent waste, fraud and abuse. They said they had designated charge card management a major focus area in 2005 under Appendix B of Circular No. A-123.

OMB also proposed issuing more guidance to agencies, pointing out that Appendix B extends to convenience checks as well as charge cards and agency personnel have financial responsibility with regard to unauthorized and erroneous purchase card transactions.

Secured Debt Consolidation: Resurrect Your Finances

If you have too much debt in the market and you are spending more than half of your salary towards your monthly repayments, you may go for a secured debt consolidation. You can take a single loan to pay off multiple loans in the financial market. This is often done to secure a lower rate of interest to cut down on your monthly repayments.
A secured debt consolidation is offered to the borrowers against a security of some property, which serves as collateral for the funds. The rate of interest for the secured lending is lower than the unsecured loans. You can take a mortgage on your property at a lower interest rate, which can be fixed or variable.

The High Cost of War

Very little public attention has focused on bin Laden’s desired goal of provoking the United States into an overreaction that drains our economy and leads to an economic crisis. And yet here were are, over seven years after 9/11 and over five years since the invasion of Iraq, and in the midst of an economic crisis.
It would be silly, of course, to think you can draw a straight line from the Iraq War to the AIG bailout. Or to suggest that prompting widespread panic around credit default swaps was OBL’s idea from the get-go. But at the same time, it can’t really be denied that the economy would be in better shape if the $100+ billion that we’ve spent in Iraq every year for the past five years had, instead, been invested by public and private hands in productive enterprises. If instead of building bombs and Humvees that get destroyed quickly and then replaced, we’d been adding to the national stock of capital and consumer goods. If the people who’d been maimed in the war and are now getting medical treatment were, instead, working productively. Things like that.