Is it a good company at a reasonable price? I think that this is a dependable company and will produce a nice dividend and nice return for its shareholders.
I own this stock of Sun Life Financial Inc (TSX-SLF, NYSE-SLF). I first bought this stock in 2000 when it was first demutualized. It was very cheap. I bought more in 2001, 2003 and 2006. This stock was on Mike Higgs' Canadian Dividend Growth stock list and on the other dividend lists that I followed.
When I was updating my spreadsheet, I noticed I have done fine with this stock. My Total Return for the 26 years I have held this stock is 8.20% per year with 4.80% from capital gains and 3.40% from dividends. I have this stock in both my registered accounts.
Sun Life has had a good year. All insurance companies are now doing better since the interest rates have moved off of 0%. The dividends are growing faster than previous. Dividend growth for last 5 years is 9.86%, Dividend growth for last 10 years is 8.83% and Dividend growth for last 15 years is 6.14%.
If you had invested in this company in December 2015, for $1, 1,035.60 you would have bought 24 shares at $43.15 per share. In December 2025, after 10 years you would have received $585.24 in dividends. The stock would be worth $2,056.32. Your total return would have been $2,641.56. This would be a total return of 11.10% per year with 7.10% from capital gain and 4.00% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $43.15 | $1,035.60 | 24 | 10 | $585.24 | $2,056.32 | $2,641.56 |
The current dividend yield is moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4%) at 3.82%. The 5, 10 and historical median dividend yield are moderate at 4.25%, 4.10% and 3.76%. The dividend growth is moderate (8% to 14% per year) at 9.9% per year over the past 5 years. The last increase was in 2025 and for 4.6%. Note that the company has more than one increase in a year. Dividends increased by 8.6% between 2024 and 2025.
The Dividend Payout Ratios (DPR) are mostly fine, but they could improve on the DPR for Cash Flow. The DPR for 2025 for Earnings per Share (EPS) is high at 57% with 5 year coverage at 51%. The DPR for 2025 for Adjusted Earnings per Share (AEPS) is good at 47% with 5 year coverage at 45%. This is an important ratio. The DPR for 2025 for Cash Flow per Share (CFPS) is too high at 70% with 5 year coverage at 63%. The DPR for 2025 for Free Cash Flow (FCF 1) is non-calculable due to a negative FCF with 5 year coverage too high at 114%. The DPR for 2025 for Free Cash Flow (FCF 2) is good at 15% with 5 year coverage at 18%. FCF for 2025 varied from $13,613M to a negative $1,270M. There were only two values.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 57.24% | 51.91% |
| AEPS | 47.25% | 45.08% |
| CFPS | 69.65% | 63.79% |
| FCF 1 | -162.52% | 114.02% |
| FCF 2 | 15.16% | 18.00% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2025 is high at 3.58 and currently at 3.40. However, we need also to look at the Long Term Debt/Covering Assets Ratio for 2025 which is good at 0.85 and currently at 0.85 because this is a more important ratio for a financial. The Liquidity Ratio for 2025 is good at 1.97 and 1.97 currently. The Debt Ratio for 2025 is low at 1.07 and 1.07 currently but fine for a financial. The Leverage Ratio for 2025 are good at 23.5% currently at 23.5%
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R+A | 0.85 | 0.85 |
| Lg Term R | 3.58 | 3.40 |
| Intang/GW | 0.31 | 0.29 |
| Liquidity | 1.97 | 1.97 |
| Liq. + CF | 2.05 | 2.23 |
| Debt Ratio | 1.07 | 1.07 |
| Leverage Co | 23.5% | 23.5% |
The Total Return per year is shown below for years of 5 to 26 to the end of 2025. 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. |
|---|---|---|---|---|---|
| 2020 | 5 | 9.86% | 12.11% | 8.65% | 3.47% |
| 2015 | 10 | 8.83% | 11.10% | 7.10% | 4.00% |
| 2010 | 15 | 6.14% | 11.33% | 7.22% | 4.11% |
| 2005 | 20 | 6.55% | 5.98% | 3.08% | 2.90% |
| 2000 | 25 | 8.30% | 5.69% | 3.09% | 2.59% |
| 1999 | 26 | 7.96% | 12.24% | 7.62% | 4.63% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 11.51, 12.46 and 14.17. The corresponding 10 year ratios are 10.41, 12.35 and 14.06. The corresponding historical ratios are 11.51, 13.28 and 19.04. The current ratio is 12.78 based on a stock price of $96.28 and EPS estimate for 2026 of $7.53. The current ratio is between the low and median ratio 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 Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.52, 10.59 and 11.84. The corresponding 10 year ratios are 9.43, 10.45 and 12.00. The corresponding historical ratios are 9.72, 11.09 and 12.16. The current ratio is 12.05 based on a stock price of $96.28 and AEPS estimate for 2026 of $7.99. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. This is probably a better guide that the P/E Ratio test.
I get a Graham Price of $84.65. The 10-year low, median, and high median Price/Graham Price Ratios are 0.74, 0.87 and 0.97. The current ratio is 1.14 based on a stock price of $96.28. The current ratio is above the high ratio of the 10 year median ratios. 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 1.52. The current ratio is 2.42 based on a stock price of $96.28, Book Value of $22, 0.75M, and Book Value per Share of $39.86. The current ratio is 59% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have a Book Value per Share estimate for 2026 of $43.66. This analyst calculates the Book Value differently than I do and, in this case, the 10 year median ratio is 1.28. In this case the current ratio would be 2.21 based on a Book Value per Share of $43.66, Book Value of $24,179M and a stock price of $96.28. This ratio is 72% 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 8.20. The current ratio is 11.12 based on Cash Flow per Share estimate for 2026 of $8.66, Cash Flow of $4,796M and a stock price of $96.28. The current ratio is 36% 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 3.76%. The current dividend yield is 3.82% based on dividends of $3.68 and a stock price of $96.28. The current dividend yield is 1.7% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median dividend yield of 4.10%. The current dividend yield is 3.82% based on dividends of $3.68 and a stock price of $96.28. The current dividend yield is 6.7% 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 0.97. The current P/S Ratio is 1.25 based on Revenue estimate for 2026 of $42,789M, Revenue per Share of $77.28 and a stock price of $96.28. The current ratio is 28% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably on the expensive side. I would rate it a Hold. The 10 year dividend yield test says that the stock price is reasonable, but above the median. The P/S Ratio test does not confirm this and says that the stock price is relatively expensive. The P/GP Ratio test also says it is expensive. Most of the testing is saying that the stock price is relatively expensive. Some says reasonable but above the median. Also, the stock chart is showing that the stock price is close to an all-time high. Usually, it is not the time to buy when a stock is at an all-time high. I would rate it a Hold.
When I look at analysts’ recommendations, I find Strong Buy (6), Buy (1), Hold (6) and Underperform (2). The consensus would be a Buy. The 12 month stock price consensus is $95.86 with a high of $105.00 and a low of $78.00. The 12 month stock price consensus implies a total return of 3.39% with 0.44% from capital loss and 3.82% from dividends based on a current stock price of $96.28.
The only entry for 2026 on Stock Chase is a Do Not Buy. Analyst says SLF is into mutual funds that is a mature business. In 2025 there were many entries and all were either Buy or Hold. Amy Legate-Wolfe on Motley Fool likes this stock their 4% dividend. She says that the company will produce dependable income. Aditya Raghunath on Motley Fool says that the company continues to grow at a steady pace and offers a tasty dividend. The company put out a Press Release about their fourth quarter of 2025.
Simply Wall Street via Yahoo Finance reviews this case. They say that the fair value of this company is 5% below the analyst target so it is within the 10% band for a fair value signal. They have no warnings out on this company
Sun Life Financial is one of the Big Three Canadian life insurers. The Canadian business the firm provides health, life insurance, and annuity products to individual and group customers. Its US business is mostly group health. and. Sun Life also offers life insurance and wealth products in several Asian markets with a strong presence in Hong Kong and the Philippines. Its asset management business had around CAD 1.2 trillion total assets under management or administration at the end of 2025. Its web site is here Sun Life Financial Inc.
The last stock I wrote about was about was Goodfellow Inc (TSX-GDL, OTC-GFELF) ... learn more. The next stock I will write about will be Alaris Equity Partners Income Trust (TSX-AD.UN, OTC-ALARF) ... learn more on Wednesday, April 22, 2026 around 5 pm. Tomorrow on my other blog I will write about Lemonade Portfolio.... learn more on Tuesday, April 21, 2026 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.
See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
No comments:
Post a Comment