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.
When I was updating my spreadsheet, I noticed my stock is not making the 8% I would like to see, but it is close and Insurance companies have had a hard time to very low interest rates. It will to do better when interest rates go up. My total return is 7.55% with 4.12% from capital gains and 3.43% from dividends. I have had this stock for almost 21 years. On my original investment I am making a dividend yield of 16%. There has been insider buying over the past year by CFO, some officers and Chairman.
The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 3.44%. The 5, 10 and historical dividend yield are also moderate at 3.86%, 3.91% and 3.64%. The dividend growth over the past 5 years is low (below 8%) 7.8% per year. The dividends were increased twice in 2019 by 10%, but there has been no increase since then.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2020 is 54% with 5 year coverage at 47%. The DPR for CFPS is 18% with 5 year coverage at 30%. However, the DPR for CFPS excluding Working Capital is negative, so non-calculable, but the 5 year coverage is fine at 48% if a little high. The DPR for Free Cash Flow is 19% with 5 year coverage at 33%.
Debt Ratios are fine. Because this is a financial company, I am looking at Debt/Covering Assets Ratio. This company’s ratio is 0.84. You know that they have enough covering Assets for their Long Term Debt if this ratio is less than 1.00. I get a Liquidity Ratio of 1.94 for 2020, but this ratio is not of much importance for financials. The Debt Ratio for 2020 is 1.09 and this is fine for financials.
The Total Return per year is shown below for years of 5 to 21 to the end of 2020. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2015 | 5 | 7.82% | 8.71% | 5.58% | 3.14% |
| 2010 | 10 | 4.33% | 10.69% | 6.51% | 4.18% |
| 2005 | 15 | 5.47% | 4.31% | 1.29% | 3.02% |
| 2000 | 20 | 7.91% | 4.46% | 1.75% | 2.70% |
| 1999 | 21 | 7.52% | 12.14% | 7.38% | 4.76% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 10.12, 12.04 and 13.69. The corresponding 10 year ratios are 10.30, 11.98 and 13.67. The corresponding historical ratios are 11.75, 13.43 and 15.09. The current P/E Ratio is 11.18 based on a stock price of $64.04 and EPS estimate for 2021 of $5.73. The current ratio is between the low and median 10 year ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $70.01. The 10 year low, median, and high median Price/Graham Price Ratios are 0.76, 087 and 1.03. The current P/GP Ratio is 0.91 based on a stock price of 64.04. The current ratio is between the median and high median 10 year P/GP ratios. 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 1.41. The current P/B Ratio is 1.68 based on a stock price of $64.04. The current ratio is 19.6% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median Price/Cash Flow per Share Ratio of 9.97. The current P/CF Ratio is 8.31 based on Cash Flow per Share estimate for 2021 of $7.71 and a stock price of $64.04. The current ratio is 17% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 3.64%. The current dividend yield is 3.44% based on a stock price of $64.04 and dividends of 2.20. The current yield is 5.6% below the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 3.91%. The current dividend yield is 3.44% based on a stock price of $64.04 and dividends of 2.20. The current yield is 12% below the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10 year median Price/Sales (Revenue) Ratio is 0.95. The current P/S Ratio is 0.99 based on Revenue estimate for 2021 of $34,432M, Revenue per Share of $64.63 and a stock price of $64.04. The current ratio is 3.8% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median
Results of stock price testing is that the stock price is probably reasonable. Most of the testing is pointing to a reasonable price of above or below the median. The dividend yield tests and the P/S Ratio test is pointing to a reasonable price, but above the median. So, some caution is advised.
Is it a good company at a reasonable price? I still like this company. It is a dividend growth stock and the price would appear to be reasonable, but a bit on the high side. When interest rates go up and they will eventually, this stock should do better.
When I look at analysts’ recommendations, I find Strong Buy (4), Buy (6), Hold (4), and Underperform (1). The consensus would be a Buy. The 12 month stock price consensus is $68.57. This implies a total return of $10.51% with 7.07% from capital gains and $3.44% from dividends.
Analysts spend time comparing Sun Life on Stock Chase to MFC. Nicholas Dobroruka on Motley Fool thinks this is a top dividend stock to buy today. The Executive Summary on Simply Wall Street gives this stock 4 stars out of 5 and says there is one risk factor. A writer on Simply Wall Street talks about ownership of shares for this company. Tbonepearson on YouTube talks about Manulife and Sun Life. This was an interesting presentation.
Sun Life Financial is one of Canada's Big Three life insurance companies along with Great-West Lifeco and Manulife. Sun Life provides insurance, retirement, and wealth-management 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 Goodfellow Inc (TSX-GDL, OTC-GFELF) ... learn more. The next stock I will write about will be Alaris Equity Partners Income Trust (TSX-AD, OTC-ALARF) .... learn more on Friday, April 9, 2021 around 5 pm. Tomorrow on my other blog I will write about Something to Buy April 2021.... learn more on Thursday, April 08, 2021 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.
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