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This Soaring 28% Finance Stock Might Be the Key to a Secure Retirement

If your focus is on the long haul, such as planning for retirement, you’ll seek out stocks capable of maintaining their value and steadily performing over time. Stability, revenue generation, and modest appreciation are key factors. This is precisely where lesser-known financial sector stocks tend to excel. Currently, one particular stock warrants a more detailed examination.

Power Corporation of Canada

(

TSX:POW

).

The stock

The Power stock has recently experienced an upward trend, increasing by almost 28% over the past year and currently trading at approximately $50 per share. Despite this rise, it remains relatively undervalued considering its underlying fundamentals. With a market capitalization of roughly $31.86 billion and a forward P/E ratio of 12.5, such pricing isn’t typical for firms of this size and stability.

Essentially, Power acts as a holding firm. It has significant stakes in various corporations, with particular emphasis on

Great-West Lifeco

and

IGM Financial

These enterprises specialize in insurance, wealth management, and investment services—essentials for Canadians during both prosperous periods and challenging times. Therefore, even though Power Corporation itself may not be widely recognized, the corporations it oversees are indeed well-known entities.

The numbers

Let’s discuss earnings. For the first quarter of 2025, they announced net earnings from ongoing activities totaling $689 million, equivalent to $1.07 per share. This represents a slight decline from $758 million or $1.17 per share in the previous year. However, when adjustments are factored in, the situation looks better: adjusted earnings amounted to $787 million, equating to $1.22 per share, which is higher than the $710 million or $1.09 per share recorded in the same period for 2024. Therefore, the fundamental aspects of their business remain robust.

That’s crucial if you’re considering your retirement income. You wouldn’t want a dividend that appears attractive initially but drops significantly during economic downturns. At present, Power Corporation boasts a dividend yield around 4.91%, which is quite robust. However, what matters most is its sustainability. This firm has substantial resources, a solid balance sheet, and consistent profits from industries providing vital services. When interest rates rise, people still require insurance and financial guidance.

The growth

When discussing interest rates, although elevated levels have adversely affected certain businesses, Power Corporation is well-equipped to manage these conditions. One of its major assets, Great-West Lifeco, often sees advantages with increased rates. This company generates greater earnings from the funds it retains and achieves superior yields on its fixed-income portfolios. Consequently, this aids in offsetting any potential short-term setbacks.

volatility

in the markets.

There’s also considerable untapped growth potential. Power Corporation has been making investments in alternative asset management via Sagard and Power Sustainable. These ventures concentrate on areas such as private equity, venture capital, and impact investing. This addition brings a forward-looking element to their portfolio and paves the way for expanded long-term growth outside of conventional financial sectors.

The takeaway

The appeal of this stock for retirement planning lies in its trifecta of low valuation, steady earnings, and robust fundamental strength. Instead of speculating on rapid advancements or fleeting trends, you’re investing in a firm that oversees other reputable businesses and distributes that worth back to shareholders through dividends and share repurchases.

So, if you’re considering the

market right now

If you’re pondering where to invest for the long term, now might be the time. Despite its recent growth, Power Corporation remains undervalued according to numerous analysts’ assessments and isn’t likely to stay at these levels indefinitely. Getting in while it’s still low could secure a steady stream of revenue for decades to come. In terms of retirement planning, having such financial security is invaluable.

The post

This Financial Stock Up 28% Might Aid in Safeguarding Your Retirement

appeared first on

The Motley Fool Canada

.

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Fool contributor

Amy Legate-Wolfe

The Motley Fool does not hold any shares in the stocks discussed. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a

disclosure policy

.