Wednesday, May 22, 2013

Manulife Financial Corp

I own this stock of Manulife Financial Corp (TSX-MFC, NYSE-NFC). I first bought this stock in 2005, then more in 2006, 2009, 2010 and a bit more in 2013. My total return is a negative 5.97%, with a capital loss of 8.83% and dividends of 2.86%. Not a good showing, but this is an insurance company and they all are having difficulties.

This company did what few insurance companies have done and that is that it cut its dividends. At the time, the dividend cut was a 50%, but that was just after a rise in dividends so it was more like 46%. Still a big cut for dividends. This was in 2009 and dividends have been flat ever since.

Last year for 2012, was the first year since the dividend cut that the Dividend Payout Ratio for earnings was in a decent range. The DPR for 2012 was 59%. Still this is higher than the historical norm for this stock which has a DPR for earnings in the mid-20% range. The DPR for cash flow has remained fine and the 5 year median DPR for cash flow is 11%.

Over the past 5 and 10 years, outstanding shares have increased by 4% and 7% per year, respectively. Outside of cash flow, this is this is the only growth. Revenue, Earnings and book value are all down, as is the stock price.

Cash flow is up 7.3% and 10.7% per year over the past 5 and 10 years. The 5 year running growth in cash flow is better, with growth at 8.6% and 17.6% per year over the past 5 and 10 years.

Return on Equity has been lousy since 2008, with the ROE for 2012 at 6.5% and the ROE on comprehensive income lower at 5.3%. The ROE for the first 12 months is worse at just 3.9%.

The Debt Ratio for this stock is in line with financial institutions which are always low. The Debt Ratio for 2012 was 1.06 and the current one is 1.05. Both of these are lower than the 5 and 10 years median Debt Ratios of 1.07 and 1.08.

I will continue to hold my shares and collect my dividends. I cannot image much in the way of progress until interest rates improve. Insurance companies are also vulnerable to stock market changes and we are in a secular bear market. I do not really expect much to happen for a while yet. See my spreadsheet at mfc.htm.

This is the first of two parts. Second part will be Thursday at shown here.

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. Its web site is here Manulife.

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 for stocks followed and investment notes. Follow me on Twitter or StockTwits.

1 comment:

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