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 know that insurance companies have had a rough time because of ultra-low interest rates. They all should do better in the future with rising interest rates. I have a total return on this stock of $7.39% per year. This is a little mediocre. I have capital gain of 3.94% per year and dividends of $3.45% per year. My dividends have paid for 65.6% of the cost of my stock. On my original purchase I am making a yield of 13.5%.
Dividends are in the moderate range and the dividend increases have been low. They used to have better dividend growth but the last recession and with extremely low dividend yields, insurance companies have not been doing well. They will do better when the interest rates get to a more normal level.
The current dividend yield is 3.46% with 5, 10 and historical rates at 3.64%, 4.18% and 3.58% respectively. The dividend growth over the past 5, 10, 15 and 18 years is 3.92%, 2.83%, 7.87% and 7.43% per year. The dividend growth is low as there were no dividend increases in the years of 2009 to 2014 inclusive.
The Dividend Payout Ratio for EPS is at 50% for 2017 with 5 year coverage of 50%. The DPR for CFPS is 54% with 5 year coverage of 38%. They can cover their dividend fine.
I have Total Returns for the past 18 years since this stock was issued. So the Total Return for the past 5, 10, 15 and 18 years are 17.66%, 2.05%, 8.10% and 12.71%. The portion of this Total Return that is attributable to capital gains is 14.49%, -0.71%, 4.53% and 8.13%. The portion of this Total Return that is attributable to dividends is 3.17%, 2.76%, 3.57% and 4.58%.
The statistics from above in chart form.
| Years | Div Gth | Tot Ret | Cap Gain | Div |
|---|---|---|---|---|
| 5 | 3.92% | 17.66% | 14.49% | 3.17% |
| 10 | 2.83% | 2.05% | -0.71% | 2.76% |
| 15 | 7.87% | 8.10% | 4.53% | 3.57% |
| 18 | 7.43% | 12.71% | 8.13% | 4.58% |
The 5 year low, median and high median Price/Earnings Ratios are 12.37, 13.73 and 15.09. The 10 year corresponding ratios are 11.46, 12.71 and 14.18. The historical ratios are 12.03, 13.65 and 15.09. The current P/E Ratio is 11.72 based on a stock price of $52.61 and 2018 EPS estimate of $4.49. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $56.61. 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 0.93 based on a stock price of $52.61. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Book Value per Share Ratio is 1.35. The current P/B Ratio is 1.66 based on Book Value of $19,364M, Book Value per Share of $31.72 and a stock price of $52.61. The current P/B Ratio is some 23% above the 10 year median. This stock price testing suggests that the stock price is relatively expensive.
Note that a good P/B Ratio for buying a stock is 1.50. The reason for the low P/.B Ratios is because this company has not been doing that well lately and therefore the stock price has not been growing much. I expect it to do better in the future with the rising interest rates.
The historical median dividend yield is 3.58%. The current dividend yield is 3.46% based on dividends of $1.82 and a stock price of $52.61. The current dividend is some 3.4% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The reason that it is not showing a cheap price on this testing is that dividends were flat for a number of years from 2009 to 2014.
The 10 year median Price/Sales (Revenue) Ratio is 0.95. The current P/S Ratio is 1.00 based on 2018 Revenue estimate of $32,185M, Revenue per Share of $52.72 and a stock price of $52.61. The current P/S Ratio is some 5% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
When I look at analysts' recommendations I find Buy (9) and Hold (5) recommendations. The consensus would be a Buy. The 12 month stock price consensus is $58.50. This implies a total return of 14.66% with 11.20% from capital gain and 3.46% from dividends based on a current stock price of $52.61.
Fred Thornhill of Reuters published in the Globe and Mail an article about this company acquiring Excel Funds and then exited their EIFs funds. Xavier Javi on Registrar Journal talks about changes in institutional investment in this company. Winifred Garcia on Reurope Financial New talks about recent analysts ratings for this company. See what analysts are saying about this company on Stock Chase. Most like this company.
Sun Life Financial Inc. provides diversified financial services. It provides insurance, retirement, and wealth management products and services to individual and corporate customers in Canada, the United States and Asia. 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 Alaris Royalty Corp (TSX-AD, OTC-ALARF)... learn more on Tuesday, April 3, 2018 around 5 pm.
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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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