Wednesday, March 29, 2017

Sun Life Financial Inc.

Sound bite for Twitter and StockTwits is: Dividend growth financial. The stock price seem current reasonable, but some tests show it above the median. I believe this stock should do well in the longer term. See my spreadsheet on Sun Life Financial Inc..

I own this stock of Sun Life Financial Inc. (TSX-SLF, NYSE-SLF). I first bought this stock in 2000 when it was first demutualized. It was very cheap. I bought more in 2001, 2003 and 2006. This stock was on Mike Higgs' Canadian Dividend Growth stock list and on the other dividend lists that I followed.

I expect to do well in the long term on this stock. However, my total return to date is not great. I have a total return of 7.06% per year with 3.54% from capital gain and 3.52% from dividends. I have held this stock for almost 17 years. Some 60% of my stock's original cost has been paid by dividends. Life Insurance companies are doing better, but very low interest rates have done a lot of harm.

The dividend yield is moderate. The current dividend yield is 3.46% based on dividends of $1.68 and a share price of $48.54. The 5 year median dividend yield is 3.67%, the 10 year median dividend yield is 4.18% and the historical median dividend yield is 3.54%.

Dividend growth is currently low. The 5 and 10 year growth is at 2.2% and 3.4% per year. This is because there were no dividend increases between 2008 and 2014. Dividend increases just resumed in 2015. This last dividend increase was at the end of 2016 and was for 3.7%. However, dividends increase by 6.3% in 2016 because there were two increases in 2016.

Dividend Payout Ratios were generally quite high in years of flat dividends. However, for 2016 the DPR for EPS was 40%. The 5 year median DPR for EPS is 51%. The DPR for CFPS is low in 2016 at 15% and its 5 year median is 17%.

The largest debt for Life Insurance companies is for insurance contracts. With this company the Debt/Market Cap Ratio is 3.64. It is normal to have a high Debt/Market Cap Ratio for Life Insurance companies. I get a Liquidity Ratio of 1.65 for this company. Liquidity Ratios are not very important for Life Insurance companies. The Debt Ratio is 1.09 and this is good for an insurance company. Leverage and Debt/Equity Ratios for 2016 are 11.54 and 10.54. These are rather good for an insurance company.

When dealing with financial sector stocks, you should compare their debt ratios to other financials or insurance companies to get a sense of what is good or not. Financials have quite different takes on debt ratios than other sectors may have.

The 5 year low, median and high median Price/Earnings per Share Ratios are 10.54, 11.69 and 13.27. The 10 year corresponding values are 11.46, 12.56 and 13.87. The historical values are 12.01, 13.57 and 15.09. Part of the decline in stock price is the decline in the P/E Ratios. The current P/E Ratio is 13.23 based on a stock price of $48.54 and $3.67. In connection with recent P/E Ratios, this ratio is rather high, but not compared to historical data.

I get a Graham Price of $50.57. The 10 year low, median and high median Price/Graham Price Ratios are 0.70, 0.91 and 1.03. The current P/GP Ratio is 0.96 based on a stock price of $48.54. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a 10 year median Price/Book Value per Share Ratio of 1.35. The current P/B Ratio is 1.57 based on a stock price of $48.54 and BVPS of $30.97. The current ratio is some 16% higher than the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get an historical dividend yield of 3.54%. The current dividend of 3.46% is some 2% lower. The current dividend yield is based on dividends of $1.68 and a stock price of $48.54. This stock price testing suggests that the stock price is relatively reasonable and around the median.

When I look at analysts' recommendations, I find Buy, Hold and Underperform Recommendations. Most of the recommendations are a Hold and the consensus would be a Hold. The 12 month stock price consensus is $54.00. This implies a total return of 14.715 with 11.25% from capital gains and 3.46% from dividends.

This first article in the Insurance Journal talks about Sun Life reshuffling their executive team. An article by Zacks Research on the NASDAQ site talks about why you should hold on to Sun Life shares. Jonathan Ratner at the Financial Post says that Sun Life expects to see a boast in earnings. See what analysts are saying about this stock on Stock Chase. They rather like this stock.

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.

The last stock I wrote about was about was BCE Inc. (TSX-BCE, NYSE-BCE)... learn more . The next stock I will write about will be DH Corp (TSX-DH, OTC-DHIFF)... learn more on Friday, March 31, 2017around 5 pm. Tomorrow on my other blog I will write about Type of Investor... learn more on Thursday, March 30, 2017around 5 pm.

Also, on my book blog I have put a review of the book Tribe by Sebastian Junger learn more...

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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits.

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