Tuesday, May 27, 2008

Manulife Financial Corp

This blog is meant for educational purposes only, and not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional.

I bought this stock (TSX code MFC) in 2005 for my Canadian Trading Account. According to Quicken, I have made a return of some 13% annually (IRR - Internal Rate of Return). Over the last 5 years dividends have added approximately 4% points to its annual return.

I would consider this stock a dividend paying growth stock. It is also growing it dividend, and over the last 5 years the dividend has grown at a rate of some 22%. Of course, there are lots of growth stocks that have done much better, but this stock has very solid numbers. Revenues and earnings are increasing nicely. Book value is not increasing as fast, but is coming along nicely.

The price of this stock has come down recently, but this is more to do with the current financial crunch that anything that Manulife did.

As I have said above, this is a very solid stock. It is in the life insurance business, and these companies tend to be solid and conservative. I worked in the life insurance industry all my life, in the systems area. I was a business analyst. However, analyzing is analyzing, I do well at this, whether it is business systems, stocks or genealogy. I also worked for Manulife in Toronto for 3 years ending in 1999.

The spreadsheet I have placed below will show mostly the past. What you now need to do is compare Manulife with the S&P/TSX composite index. It has not been following the index of late as the TSX has gone up and this stock has not. This is mainly because RIM and resources have taken off. Now compare this stock to the S&P/TSX capped financial index. It has done better than this index over the last year, but has followed the ups and downs of the financial index. You can use the charts at http://www.globeinvestor.com/ to do this comparison. On the Globe & Mail investor site’s search box use “MFC-T”. Also at the globe investor website you can see what some analyst think about the stock in terms of it being a buy, sell or hold. If you have a trading account with a major bank, you can probably get a stock report on this stock from them.

Do not be afraid to buy out of favour stocks or sectors. The idea is to make money and you do this by “buy low, sell high”.

See my spreadsheet at http://http://www.spbrunner.com/stocks/mfc.htm. See my website at http://www.spbrunner.com/stocks.html.

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This is a life insurance company in the financial services business. It offers financial protection products (e.g. Life Insurance) and wealth management services (i.e. segregated funds, mutual funds and pension products). They sell products to individuals and business. They are an international company, selling in Canada, US and Asia. This company is listed on Canadian, US, Hong Kong and Philippines Stock Exchanges.

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