Sun Life Financial Inc.

Sound bite for Twitter and StockTwits is: 2014 was an improvement, Div raise soon? If you hold stocks over the very long term like I do, there is going to be periods with all stocks where the underlying company will have problems or have to reorganize. This is normal. See my spreadsheet at slf.htm.

I own this stock of Sun Life Financial Inc. (TSX-SLF, NYSE-SLF). After I sold my CIBC bond in 2000 I had money to buy some stocks so I made a hit list and looked for ones on this list selling at a reasonable price. This stock was selling at a reasonable price at that time.

As with a number of insurance companies, this company has not raised their dividends for some time. They have kept their dividends level since 2008. Analysts are hopeful that 2015 will be the year when dividends will be raised again. Manulife (TSX-MFC), Power Financial (TSX-PWF) and Great West Lifeco (TSX-GWO) have now raised their dividends, Manulife in 2014 and Power Financial and Great West in 2015.

I have had this stock for 15 years. My total return is 6.03% per year with 2.27% in capital gains and 3.76% in dividends. Over the years I have received some $14.81 in dividends and this is 49% of the price of my shares.

The total return over the past 5 and 10 years is a mixed bag. Over the past 5 years the return is decent, but it is very low over the past 10 years. I consider a decent return to be 8% per year over the longer term. The total return over the past 5 and 10 years is at 8.85% and 1.33% per year. The portion of this return attributable to dividends is 3.21% and 2.96% per year. The portion of this return attributable to capital gain is 5.64% per year over the past 5 years and a loss of 1.64% per year over the past 10 years.

There is no or not much growth over the past 5 and 10 years. However, 2014 was a good year for this company as Revenue, earnings and cash flow was all up. Revenue and Revenue per Share was up in 2014 by 86% and 84% in 2014. Net Income and EPS was up by 87% and 85% in 2014. Cash Flow and CFPS was up by 187% and 186% in 2014.

EPS shows growth of 24.9% per year over the past 5 years, but that is because exactly 5 years ago was an EPS low point. If you look at 5 year running averages, EPS is down by 6.4% per year over the past 5 years. So really, there is not much growth there over the past 5 years.

The Return on Equity has been low since 2008. The ROE for 2014 was 9.3% in 2014 and this has a 5 year median of 8.6%. However, the ROE on comprehensive income has been over 10% for the last 3 years. The comprehensive income ROE for 2014 is at 16.5% and the 5 year median is 10.7%.

This is an insurance company and Liquidity Ratios are not much important, Debt Ratio will be low and Leverage and Debt/Equity Ratios will be high. The Debt Ratio is 1.09 and this is good for an insurance company. The Leverage and Debt/Equity Ratios are 11.84 and 10.84 and are rather normal or a bit low for an insurance company. These ratios often depend on the industry a company is in and so it is important to compare them to similar companies.

This is the first of two parts. The second part will be posted on Wednesday, April 15, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Sun Life Financial is a leading international financial services organization providing a diverse range of protection and wealth accumulation products and services to individuals and corporate customers. Chartered in 1865, Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. Its web site is here Sun Life.

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. 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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