Manulife Financial trades at a low 7.7 times its likely 2019 earnings of $2.90 a share. Its annual dividend of $1.00 a share yields 4.5 per cent. Buy for growth and income.
Manulife Financial Corp. (TSX—MFC) performed strongly in 2018. The company delivered the highest core earnings and net income in its history. Core earnings increased 23 per cent, with double-digit earnings growth across all segments.
In the important Asian market, Manulife achieved a 19-per-cent increase in new business value to US$1.1 billion. And while wealth asset management (WAM) net inflows were negatively impacted by the market volatility of the fourth quarter, the company generated net inflows of $1.6 billion in 2018, its ninth consecutive year of positive flows.
Markets in Canada, US and Asia
Manulife is the largest of the three major Canadian life insurance companies by market capitalization, ahead of Sun Life and Great-West Life. It provides financial protection and wealth management products and services to individual and group customers in Canada, the US and Asia through the brand name Manulife Financial in Canada and Asia and primarily through the brand name John Hancock in the US.
For the year ended Dec. 31, 2018, Manulife made $5.6 billion (core earnings), or $2.84 a share, compared with $4.6 billion, or $2.22 a share, in 2017.
The increase was driven by: improved policyholder experience and the non-recurrence of 2017’s hurricane-related charges in the company’s property and casualty reinsurance business; business growth in Asia and global WAM; the impact of lower US taxes; and greater expense efficiency. The 2018 results included net policyholder experience gains of $38 million after-tax compared with charges of $168 million after-tax in 2017.
In November, Manulife declared a 13.6-per-cent increase in its quarterly common share dividend to $0.25 a share.
Buy for capital gains and income
Manulife stands to benefit from growth in its Asian and wealth management businesses. These segments, along with group insurance in Canada and behavioural insurance products, are among the company’s high potential businesses. They now make up 55 per cent of core earnings. Management has set a target to generate two-thirds of core earnings from high potential businesses by 2022.
Manulife trades at a low 7.7 times its likely 2019 earnings of $2.90 a share. Its annual dividend of $1.00 a share yields 4.5 per cent.
Manulife Financial is a very conservative blue chip stock to buy for growth and income.
This is an edited version of an article that was originally published for subscribers in the March 15, 2019, issue of Money Reporter. You can profit from the award-winning advice subscribers receive regularly in Money Reporter.
Money Reporter, MPL Communications Inc.
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