Is it a good company at a reasonable price? I think this is a good company and I understand life insurance companies because I worked in IT in several. This stock is on various lists, like the Dividend Aristocrat list and Money Sense list of 100 best dividends stock. The current price is reasonable and it may even be relatively cheap. I own this stock but probably will not buy any more as I have enough of it.
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 that I have had this stock for 23 years and have made 7.49% with 3.92% from capital gains and 3.57% from dividends. The problem for Life Insurance companies was very low interest rates. I expect them to do better with more normal interest rates.
If you had invested in this company in December 2012, for $1,002.06 you would have bought 38 shares at $26.37 per share. In December 2022, after 10 years you would have received $722.57 in dividends. The stock would be worth $2,388.30. Your total return would have been $3,110.87.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $26.37 | $1,002.06 | 38 | 10 | $722.57 | $2,388.30 | $3,110.87 |
The current dividend yield is moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 4.53%. The 5, 10 and historical median dividend yields are also moderate at 3.96%, 3.76% and 3.64%. The dividend increases are currently moderate (8% to 14% ranges) at 9.6% per year over the past 5 years. The last dividend increase was in 2022 and it was for 4.3%. However, this company often increases their dividend more than once a year. The total increase in 2022 was for 19.5%.
The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2022 is 53% with 5 year coverage at 46%. The DPR for Adjusted Earnings per Share (AEPS) for 2022 was 44% with 5 year coverage at 41%. The DPR for Cash Flow per Share (CFPS) for 2022 is 7% with 5 year coverage at 24%. The DPR for Free Cash Flow (FCF) for 2022 was 39% with 5 year coverage at 44%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is 3.90. The Long Term Debt/Covering Assets Ratio is 0.81 and that is good. The Liquidity Ratio, although not important for Financials, in 2022 was 1.74. The Debt Ratio for 2022 is 1.10 and this is fine for financials.
The Total Return per year is shown below for years of 5 to 23 to the end of 2022. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 9.60% | 7.14% | 3.91% | 3.23% |
| 2012 | 10 | 6.72% | 13.88% | 9.07% | 4.80% |
| 2007 | 15 | 5.04% | 3.70% | 0.81% | 2.89% |
| 2002 | 20 | 8.30% | 8.06% | 4.37% | 3.69% |
| 1999 | 23 | 7.90% | 12.01% | 7.20% | 4.81% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 10.12, 12.04 and 13.96. The corresponding 10 year ratios are 10.41, 12.15 and 14.06. The corresponding historical ratios are 11.59, 13.13 and 14.47. The current P/E Ratio is 10.07 based on a stock price of $63.64 and EPS estimate for 2023 of $6.32. The ratio is below low ratio for the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.63, 10.19 and 11.84. The corresponding 10 year ratios are 9.57, 10.82 and 12.12. The current P/AEPS Ratio is 9.85 based on AEPS estimate for 2023 of $6.46 and a stock price of $63.64. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $78.71. The 10-year low, median, and high median Price/Graham Price Ratios are 0.72, 0.84 and 0.96. The current P/GP Ratio is 0.81 based on a stock price of $63.64. This ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10-year median Price/Book Value per Share Ratio of 1.48. The current P/B Ratio is 1.49 based on a stock price of $63.64, Book Value of $25,011M and Book Value per Share of $42.65. The current ratio is 0.8% above the 10 year median ratio This stock price testing suggests that the stock price is relatively reasonable but above (or at) the median.
I also have a Book Value per Share estimate for 2023 of $43.30. This implies a P/B Ratio of 1.47 with a Book Value of $25,291M, and a stock price of $63.64. The current ratio is 0.8% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below (or at) the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 8.20. The current P/CF Ratio is 7.93 based on Cash Flow per Share estimate for 2023 of $8.03, Cash Flow of $4,709M and a stock price of $63.64. The current ratio is 3% 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 4.53% based on dividends of $2.88 and a stock price of $63.64. The current dividend yield is 24% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 3.76%. The current dividend yield is 4.53% based on dividends of $2.88 and a stock price of $63.64. The current dividend yield is 20.4% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 1.06. The current P/S Ratio is 0.87 based on Revenue estimate for 2023 of $43,005, Revenue per Share of $73.34 and a stock price of $63.64. The current ratio is 15% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is reasonable and may even be cheap. Both the Dividend yield tests are saying the stock price is cheap. The P/S Ratio test is saying it is reasonable. The other tests vary from reasonable to cheap.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (5), Hold (7) and Underperform (1). The consensus would be a Buy. The 12 months stock price consensus is $72.73. This implies a total return of 18.81% with 14.28% from capital gains and 4.53% from dividends based on a current stock price of $63.64. The only negative remark I can find is one analyst on Stock Chase was worried about Loan Losses if we hit a depression. There was a recent positive report of this company at Zacks Equity Research.
Analysts on Stock Chase think this stock is a Buy. Stock Chase gives this stock 5 stars out of 5. The company is on the Money Sense list at number 50. Adam Othman on Motley Fool says to buy this stock if you are looking for growth and dividends. Ambrose O'Callaghan on Motley Fool thinks this is a dependable dividend stock. The company put out a press release on Newswire about their fourth quarter of 2022 results. Simply Wall Street reviewed this stock via Yahoo Finance. Simply Wall Street gives this stock 4 stars out of 5. It says the stock pass all their risk checks.
Sun Life provides life insurance, retirement, and asset management products to individuals 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 Wednesday, April 12, 2023 around 5 pm. Tomorrow on my other blog I will write about Investor Protection Fund .... learn more on Tuesday, April 11, 2023 around 5 pm.
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