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When constructing a retirement portfolio, most buyers search for a stability between reliability and long-term upside. That’s the place monetary shares can shine, particularly these with constant money circulate, sensible capital allocation, and a monitor document of weathering market volatility. Fairfax Monetary Holdings (TSX: FFH) is a type of names. It doesn’t get the identical consideration as the large Canadian banks, but it surely completely ought to be on the radar of anybody trying to safe long-term retirement earnings.
About Fairfax
Fairfax isn’t your typical monetary inventory. It operates extra like a Canadian model of Berkshire Hathaway. The corporate, led by longtime CEO Prem Watsa, is a holding firm that owns a bunch of property and casualty insurance coverage companies. It additionally manages a considerable funding portfolio throughout equities, bonds, and personal investments. So, whereas it earns premiums from insurance coverage underwriting, it additionally compounds worth by reinvesting that capital neatly.
Within the first quarter of 2025, Fairfax reported internet earnings of US$945.7 million, or US$42.70 per diluted share. That’s a giant leap from US$776.5 million, or US$33.12 per share, in the identical quarter of 2024. This soar was largely attributable to funding positive aspects, together with US$779.5 million from frequent shares and US$388.4 million from bonds. Fairfax is understood for taking contrarian positions and holding them for the long run, which has paid off handsomely as markets recovered. In a local weather the place many insurers had been nonetheless licking their wounds, Fairfax posted one in all its strongest quarters ever.
Trying long run
The corporate’s e-book worth per share, a essential metric for long-term worth buyers, elevated to US$1,080.38 as of March 31, 2025. That’s up from US$1,059.60 at year-end 2024, regardless of the corporate paying a considerable dividend of US$15 per share in the identical quarter. Fairfax has now grown e-book worth at a compound annual development charge of greater than 15% since its founding in 1985. That type of compounding is uncommon, and it issues lots should you’re trying to defend and develop wealth in retirement.
Fairfax’s core insurance coverage enterprise additionally stays robust. Gross premiums written rose 5% to US$8.5 billion, whereas internet premiums written jumped 8.4% to US$6.8 billion. These are strong numbers, particularly contemplating the corporate additionally confronted important disaster losses through the quarter, together with US$692 million associated to wildfires in California. Even with these losses, Fairfax posted an underwriting revenue of US$96.9 million and a mixed ratio of 98.5%. Something underneath 100% means it was worthwhile on underwriting alone, excluding funding earnings.
Worth and earnings
On the dividend entrance, Fairfax continues to reward shareholders. The corporate paid a US$15 per share dividend in Q1 2025. At a share value of roughly $2,282, that works out to a yield just below 1%. Whereas that may appear low for earnings buyers, it’s price wanting deeper. Fairfax pays one massive annual dividend moderately than smaller quarterly ones, and it has a long-standing historical past of defending its capital base. The corporate has additionally signalled a willingness to boost dividends over time, particularly as its funding positive aspects accumulate.
What makes Fairfax particularly enticing in a retirement context is its diversification. Its insurance coverage subsidiaries span the globe, and it has investments in dozens of sectors. That type of construction offers stability, notably throughout downturns. The corporate can also be recognized for purchasing undervalued belongings, that means it tends to carry out greatest when others are fearful, an excellent attribute to have when markets get uneven.
Backside line
In the event you’re contemplating the place to place long-term retirement funds, Fairfax deserves a glance. You get publicity to insurance coverage, investments, and world diversification, multi function. And in contrast to some dividend shares which might be liable to chopping payouts throughout robust instances, Fairfax has proven it can’t solely preserve its dividend, but additionally develop its e-book worth, even in unstable environments.
In a world of uncertainty, Fairfax stands out as a gradual hand. For buyers trying to lock in stability with upside potential, this monetary inventory, at the moment buying and selling effectively under its all-time highs, may very well be one of many extra underrated picks on the TSX. It could not supply the best yield, however its whole return potential makes it a inventory that might safe your retirement earnings for many years to return.
