Sun Life Financial Inc.

Sound bite for Twitter and StockTwits is: Price is cheap to reasonable. I like insurance companies and about 10% of my portfolio is in this company, Manulife Financial (TSX-MFC) and Power Financial (TSX-PWF). Insurance companies will thrive again and they are currently finding ways of making some money in a very lower or non-existent interest rate environment. See my spreadsheet on Sun Life Financial Inc.

I own this stock of Sun Life Financial Inc. (TSX-SLF, NYSE-SLF). I had this stock on a hit list as it was on Mike Higgs' Canadian Dividend Growth stock list and on the other dividend lists that I followed.

I have had this stock for around 16 years. I have earned total return of 6.16% with 2.37% from capital gains and 3.79% from dividends. I generally expect a total return, over the longer term of 8%. So at just over 6%, this stock is not really dog, but it has also not been a great addition to my portfolio lately. It got hit by the low interest rates, but has gradually have been improving since 2009.

Still the dividends are adding up. To date, dividends have paid for some 54% of the cost of my stock. On my original purchase in 2000, I am making a dividend yield of some 11%. After holding the dividend flat for some 6 years, the company raised the dividends in 2015 by 8.3%. Analysts expect more raises in the future.

They can now afford the dividend and can afford to raise them. Dividend Payout Ratios for EPS was down to 43% in 2015 and even with the increase in 2016, the DPR re EPS is still expected to be 43% in 2016. The Dividend Payout Ratio for CFPS was 25% in 2015 and is expected to be around 46% in 2016. Cash Flow tends to be volatile and analysts expect cash flow to be much lower in 2016 that in 2016.

The 5 year low, median and high median Price/Earnings per Share Ratios are 10.54, 11.69 and 12.85. These are lower than the 10 year and historical corresponding ratios. The 10 year values are 12.06, 13.24 and 14.40 and the historical values are 12.03, 13.65 and 15.09. The current P/E Ratio is 11.43 based on a stock price of $41.85 and 2016 EPS estimate of $3.66. This stock price testing would suggest that the stock price is relatively cheap to reasonable.

I get a Graham Price of $49.61. The 10 year low, median and high median Price/Graham Price Ratios are 0.73, 0.98 and 1.07. The current P/GP Ratio is 0.84 based on a stock price of $41.85. This stock price testing would suggest that the stock price is relatively reasonable and below the median.

The historical median dividend yield is 3.09%. The current dividend yield is 3.73% based on a stock price of $41.85 and current dividends of $1.56. The current dividend is some 21% above the historical median dividend yield and this would suggest that the stock price is relatively reasonable and below the median.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. Most of the recommendations are a Buy and the consensus recommendation would be a Buy. The 12 month price target is $44.93. This implies a total return of 11.09% with 3.73% from dividends and 7.36% from capital gains and is based on a current stock price of $41.85.

Will Ashworth at the Motley Fool discusses if Manulife or Sun Life is a better buy because of their Wealth Management fees earned. Here he likes Sun Life better. This article by Matt Scuffham in the Business Standard talks about Sun Life's expansion into Indonesia. See analysts' comments on this stock at Stock Chase.

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see those reports here and here.

The last stock I wrote about was BCE Inc. (TSX-BCE, NYSE-BCE)... learn more. The next stock I will write about will be Manulife Financial Corp. (TSX-MFC, NYSE-MFC)... learn more on Wednesday, April 6, 2016 around 5 pm.

Also, on my book blog I have put a review of the book Superpower by Ian Bremmer learn more...

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 Financial Inc.

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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