Manulife Financial

I am reviewing this stock (TSX-MFC) today as I have received its annual report for December 2008. I bought shares in this company in 2005 and 2006. I have lost some 18% per annum on this stock. However, I do expect it to bounce back, so I am not selling. In fact, I am considering buying some more.

The first thing to mention is that this stock is on everyone’s great dividend paying stock lists. This stock is on the Dividend Achievers list at www.dividendachievers.com, the Dividend Aristocrats list at www.tmxmoney.com/en/individual.html (see indices) and also on Mike Higgs’ list at www.dividendgrowth.org/Report.htm.

In reviewing the spreadsheet I see that this company is getting some important things right. They have a good increase in revenue and they have a decent cash flow. I realize the earnings are way down, but being able to keep up revenue and cash flow is much more important in tough markets. Low earnings are, of course, a negative, but they will pick up when the economy improves.

I can see why this is on everyone’s list as this stock has had great growth in dividends. In good times, the dividend tended to be a yield of around, or less than 2%, but growth is just under 20% per year over the last 5 years. However, it did slow last year to a 13.6% increase. We do not yet know what sort of increase will occur this year.

The Asset/Liability Ratio at 1.14 is not bad for an insurance company. This is just below the 5 year average of 1.15 and is at the 10 year average of 1.14. Not surprisingly, the Return on Equity (ROE) is low this year as they make little money. One good thing to point out is the Accrual Ratio is negative. The actual ratio is not that negative at only -.1%, but it is negative.

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. Its web site is www.manulife.com. See my spreadsheet on this company at www.spbrunner.com/stocks/mfc.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets.