Wednesday, March 18, 2015

Power Corp (POW) : one of my 4 main holdings

It wasn't meant like that -- although I like to think it was -- but like Warren Buffet a good chunk of my portfolio consists of only four major holdings. 

Roughly 50% of all my dividends come from these four stocks :
  1. Power Corporation (POW).
  2. Johnson and Johnson (JNJ).
  3. Royal Bank of Canada (RY).
  4. Suncor (SU).
Now I know most of you guys, especially our American friends, know about blue chip companies such as Johnson and Johnson (JNJ). Heck, I don't think I ever came across a fellow blogger/investor who hadn't this giant in its portfolio. I can't blame them. JNJ accounts form more than 10% of mine. JNJ and I are in it for the long haul.

Royal Bank of Canada (RY) and Suncor (SU), which trade in both Canada and US stock exchange, are also popular holdings among our little community (and beyond). 

Even Warren Buffet is a fellow shareholder of Suncor. That's right, you read it here folks. He holds more than 20 millions shares of this energy stock. Actually he just added 20% more to its actual holdings. It represents 0.65% of its portfolio, so just a tiny more than Verizon. Not bad. Check it out here.

But when it comes down to popularity, I guess it's a whole different story with Power Corporation of Canada (POW), the "Ringo Starr" of my 4 main holdings. 

A very few fellow bloggers/investors actually own POW or its twin brother Power Financial (PWF). Granted, the fact that POW is not trading in the US might be a reason why it's less popular among fellow bloggers. But why is it among fellow Canadian bloggers? I ask you.

It's not a popular pick and it's hard to understand because it's a company that's been highly praised for decades now. Actually, it's been a long time favorite of Money Sense and remains one to this date.

POW is the all-around conglomerate. It's been said in the past that Power Corp is the Berkshire Hathaway of the North. There's some truth to that. This is a very cautious and very low-key company. 

It's a well diversified one too. 12% of its business is done in the United States. Have you heard of Putnam Investments? 30% in Europe. Through Pargesa, POW holds significant positions in large companies based in Europe, such as Pernod Ricard and Total. 

In Canada, with franchises such as Great-West, Investors Group, Mackenzie Investments, Power Corp serves 1 out of 3 people. Canada accounts to more than 58% of its business. 

It really beats me that I don't see more Canadian investors actually holding this stock. . I know Power Corp hasn't raised its dividend since 2008 (*Power Financial just raised it today and POW will probably follow) but at roughly 4%, they actual dividend yield is very much acceptable. Dividend investors, think about it, Power Corp has the same investing philosophy as you do :

I'm not going to crunch numbers about the company, I will let this snapshot give you an idea of those. But I'm pretty sure that you now understand better why POW (and PWF) will remain among my top holdings for years to come.

Are you interested in investing in POW or PWF? Yes or no, I'd like to know!

Full disclosure : I am long POW and PWF.

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  1. I own Power as well as Great West Life - I used to work for GWO, so was involved in their share purchase plan and have just held. Bought Power back in 2009/10 after the stock market tanked - I forget exactly what I paid now but have been collecting nice divvies ever since and I think I paid around 26 bucks for it, so overall nice steady increase. Would love to see some divvy increases in the future tho.

  2. Two great stocks. I simply bought POW to hold all of its franchises at once. But I've recently added some PWF to accentuate my position in insurance. I could have also bought Great West directly. Apparently POW has decided to skip a dividend increase today. I'm glad PWF decided to increase it though. I will have to look closely to find out why POW chose not to. Thanks for coming.

  3. You answered the question why POW and PWF aren't more popular - no dividend raise since 2008. I owned PWF for a couple years, but when a raise didn't come, despite strong results, I exited thinking management didn't see rewarding shareholders as a priority.

    I'd be interested in your take in Suncor's long-term prospects if oil was to stay around its current prices.

  4. Hey DIH,

    Funny I just read an article from the Globe and Mail. Here's a quote from it : "Power Financial used to steadily increase dividends, typically twice a year, every year. “It was almost like clockwork for a long period,” said CIBC World Markets analyst Paul Holden. From 1998 to 2008, the dividend increased more than six-fold, adjusting for stock splits."

    I guess it tells you something. It's not for lack of wanting to reward their shareholders. POW and PWF are carefully managed companies. The crisis hit them hard. They would rather be there for a long period than a short one. Hence the absence of dividend increases. I much prefer no increase than a dividend cut.

    I'm confident oil won't stay at its current price for long. I'm invested in Suncor for the long haul. It's a well diversified company and the biggest one we got in Canada. I'm still surprised to see how well the stock is doing considering the turmoil (no pun intended). I guess the dividend keep it afloat. Yeah, Suncor is for the long run.

    Thanks for coming here. All there best.

  5. Power Corp is near the top of my wishlist to add to my portfolio...the more I read about it, the more I like it. Thanks for sharing.


  6. Thanks for coming by H2R. A lot of analysts are expecting POW to increase their dividends next quarter, just like PWF just did. Both POW and PWF shares are at their year high though. Still relatively cheap compare to others... A little bit like ATCO!

  7. Nice! Those 4 powerhouse stocks in your portfolio looks stable enough to provide not only immediate cash flow, but generational wealth over the long haul. My personal "pet stock" is JNJ and I intend to add more of it.

  8. Hello Mark,

    I cannot agree with more with JNJ as a pet stock. It's my biggest holding too with a weight of more than 10% of my total portfolio. Thanks for coming by.

  9. I loved POW for a long period of time. But as dividends didn't raise since 2008, I don't feel as comfortable towards this stock. As a dividend growth investor I want consistency in dividend raises.

  10. Hey Div Guy,

    I totally understand your position. But, I think it hasn't been too hard to wait meanwhile with a 3-4 % dividend yield. I much prefer no raise than a cut.

    I will stick with POW for a long time. Thanks for coming by!


Thanks a lot for your comment.