Is it a good company at a reasonable price? This company did not do well in the very low to negative interest rate period. I kept my stock in this company, because I believe that in the long term, I would be fine. I still believe that. I plan to hold on to my shares. When I was looking at the current price, it was testing for dividends and P/S Ratio at still reasonable, but above the median. I would suggest caution because it is currently near an all-time high on the stock charts.
I own this stock of Manulife Financial Corp (TSX-MFC, NYSE-MFC). This company was demutualized in 1999 and it turned into a dividend growth stock. I bought this company for the first time in 2005. Analysts liked it and it was a dividend growth stock. It looks like I bought at the wrong time as 20 year total return is the lowest return for the company. See total return chart below.
When I was updating my spreadsheet, I noticed that I have done better this year than last year in my total return. Last year my total return was 3.87%. This year, it is 5.85% with 2.47% from dividends and 3.38% from capital gains. This company, as all life insurance companies, a hard time with extremely low interest rates to negative interest rates.
Note that dividends were cut by 50% in 2009. All Life Insurance companies were having a hard time with extremely low interest rates to negative. Although not all Life Insurance company cut their rates. The company started to raise dividend rates again in 2014.
If you had invested in this company in December 2014, for $1,020.28 you would have bought 46 shares at $22.18 per share. In December 2024, after 10 years you would have received $497.72 in dividends. The stock would be worth $2,031.46. Your total return would have been $2,529.08. This would be a total return of 10.56% per year with 7.13% from capital gain and 3.43% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $22.18 | $1,020.28 | 46 | 10 | $497.72 | $2,031.36 | $2,529.08 |
The current dividend yield is moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 3.96%. The 5 year median dividend yield is good (5% to 6% ranges) at 5.37%. The 10 year and historical median dividend yields are moderate at 4.33% and 3.30%. The dividend growth is moderate (8% to 14% ranges) at 9.9% per year over the past 5 years. The last dividend increase was in 2025 when the dividends were increased by 10%.
The Dividend Payout Ratios (DPR) are good. The DPR for 2024 for Earnings per Share (EPS) is fine at 56% with 5 year coverage good at 43%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is good at 9% with 5 year coverage at 40%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 10% with 5 year coverage at 11%. The DPR for 2024 for Free Cash Flow (FCF) is good at 39% with 5 year coverage at 13%. There is no agreement on what the FCF.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 56.34% | 42.76% |
| AEPS | 8.76% | 40.55% |
| CFPS | 10.44% | 11.42% |
| FCF | 38.83% | 12.73% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2024 are high at 5.69 and currently at 5.66. However, we need also to look at the Long Term Debt/Covering Assets Ratio for 2024 which is fine at 0.98 and currently at 0.98 because this is a more important ratio for a financial. The Liquidity Ratio for 2024 is low at 1.16 and 1.16 currently. If you added in Cash Flow after dividends, the ratios are fine at 2.05 and currently at 2.04. The Debt Ratio for 2024 is fine for a financial at 1.06 and 1.06 currently. The Leverage reported for 2024 is fine at 23.7% and currently at 23.7%
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R A | 0.98 | 0.98 |
| Lg Term R | 5.69 | 5.66 |
| Intang/GW | 0.14 | 0.14 |
| Liquidity | 1.16 | 1.16 |
| Liq. + CF | 2.05 | 2.04 |
| Debt Ratio | 1.06 | 1.06 |
| Leverage Rep | 23.70% | 23.70% |
The Total Return per year is shown below for years of 5 to 24 to the end of 2024. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2019 | 5 | 9.86% | 14.96% | 10.87% | 4.08% |
| 2014 | 10 | 10.87% | 10.56% | 7.13% | 3.43% |
| 2009 | 15 | 4.91% | 8.58% | 5.66% | 2.91% |
| 2004 | 20 | 6.32% | 4.78% | 2.36% | 2.42% |
| 1999 | 24 | 8.67% | 10.09% | 6.46% | 3.63% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 6.53, 7.14 and 9.46. The corresponding 10 year ratios are 8.53, 9.99 and 11.45. The corresponding historical ratios are 10.82, 13.43 and 15.86. The current ratio is 10.73 based on a stock price of $44.45 and EPS estimate for 2025 of $4.14. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have also Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 6.86, 7.78 and 9.00. The corresponding 10 year ratios are 6.96, 8.14 and 10.01. The corresponding historical ratios are 7.22, 9.77 and 11.48. The current P/AEPS Ratio is 10.63 based on a stock price of $44.45 and AEPS estimate for 2025 of $4.18. This ratio is above the high ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $49.10. The 10-year low, median, and high median Price/Graham Price Ratios are 0.52, 0.63 and 0.73. The current ratio is 0.91 based on a stock price $44.45. This ratio is above the high ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Book Value per Share Ratio of 1.04. The current P/B Ratio is 1.73 based on a Book Value of $44,312M, Book Value per Share of 25.63 and a stock price of $44.45. The current ratio is 67% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have Book Value per Share estimate for 2025 of $27.40. This implies a Book Value of $47,375M and a ratio of 1.62 based on a stock price of $44.45. This ratio is 56% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Cash Flow per Share Ratio of 2.35. The current ratio is 2.90 based on Cash Flow per Share for the past 12 months of $15.32, Cash Flow of $26,494M and a stock price of $44.45. This ratio is 24% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 3.30%. The current dividend yield is 3.96% based on a stock price of $44.45 and a dividend of $1.76. The current dividends yield 19.9% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median. A problem with this test is that dividends have been cut in the past.
I get a 10 median dividend yield of 4.33%. The current dividend yield is 3.96% based on a stock price of $44.45 and a dividend of $1.76. The current dividends yield 8.54% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10-year median Price/Sales (Revenue) Ratio is 0.89. The current ratio is 1.02 based on Revenue estimate for 2025 of $75,418M, Revenue per Share of $43.62 and a stock price of $44.45. The current ratio is 14% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is probably still within the reasonable range, but at the top end. The 10 year median dividend yield says that the stock price is reasonable, but above the median. The P/S Ratio test says the same thing. Most of the rest of the testing suggests that the stock price is relatively expensive. I think caution is necessary.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (6), Hold (4) and Underperform (1). The consensus would be a Buy. The 12 month stock price consensus is $49.43 with a high of $53.00 and low of $39.00. This 12 month stock price implies a total return of 15.16% with 11.20% from capital gains and 3.96% from dividends based on a current price of $44.45.
Most of the analysts’ on Stock Chase give this a buy, but there are a couple of Holds. It is on the Money Sense Dividend list. Christopher Liew on Motley Fool says Manulife Financial is a compelling investment opportunity. Chris MacDonald on Motley Fool thinks this stock gives investors stability in these uncertain times. The company put out a press release via PR Newswire about their fourth quarter of 2024.
Zacks via Yahoo Finance gives a review of this stock. Insider Monkey via Yahoo Finance says that Manulife is a top extreme value stocks to buy now. Jeff Lagerquist on Yahoo Finance says BMO stays bullish on Canadian stocks, including Manulife. Simply Wall Street via Yahoo Finance says do not buy this stock now. Simply Wall Street has no warnings out on this stock.
Manulife Financial provides life insurance, annuities, and asset management products to individuals and group customers in Canada, the United States, and Asia. The US business, which primarily operates under the John Hancock brand, contributes about 27% of earnings. The Asia segment provides insurance products and insurance-based wealth accumulation products contributes around 30% of earnings. The Canadian business segment contributes approximately 23% of earnings. Its web site is here Manulife Financial Corp.
The last stock I wrote about was about was Atrium Mortgage Investment Corp (TSX-AI, OTC-AMIVF) ... learn more. The next stock I will write about will be First National Financial Corporation (TSX-FN, OTC-FNLIF) ... learn more on Monday, March 31, 2025 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
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