Manulife: A Reliable Performer at a Great Price

There’s a lot to like about Manulife Financial Corporation (MFC) and its strong balance sheet. Besides, it’s always a good sign if you have generous dividend payouts as Manulife does.

Manulife offers a range of financial services that provide peace of mind and money management. The company provides international insurance and wealth management services and investment products for individuals, corporations, and institutions.

Manulife operates in Canada, Asia, and Europe. In North America, it specializes in distributing its products through its subsidiary company, John Hancock. The company was established in 1887, and it sold its first out-of-country insurance policy in 1893.

The China Insurance Regulatory Commission (CIRC) granted Manulife the opportunity to operate in Guangzhou, the company’s first license granted for foreign joint-venture life insurance. This means that Manulife has branches in Shanghai, Beijing, and Guangzhou.

Therefore, Manulife is a great option for Asia-based businesses as it is ready to take advantage of any future growth in the insurance and finance sectors in the region.

The company is also paying a good dividend, translating to a juicy dividend yield of 4.9%. Earnings are also strong, meaning it can easily maintain its payout and continue raising the dividend.

Manulife trades at very reasonable price multiples compared to its competition. It’s a safer investment than many other stocks right now, and with it being so affordable today, it’s not a bad idea to take the plunge.

Quarterly Results Highlight Manulife’s Operational Strengths

Manulife has largely grown throughout North America and abroad. Thus, many investors looking for growth in the insurance industry look to MFC as a prime candidate.

The future of Manulife looks bright, but its past earnings show it is also an old company with a lot going for it.

Manulife recently reported its quarterly financials, from which there were some very positive takeaways. EPS came in higher than estimates, and the company’s new business value grew 17% year-over-year compared to Q4 2020.

Additionally, the company has grown its assets under management for its Global Wealth and Asset Management business quite substantially. Core investment profits increased, and losses narrowed. Combined, these improved the bottom line.

Manulife’s net income of $7.1 billion reflects substantial growth from the previous year when it made $1.2 billion. An additional aspect of the growth is the Global Wealth and Asset Management net inflows reaching $27.9 billion compared to the $8.9 billion in 2020. Also, diluted EPS grew to $3.54 from $2.93 in Fiscal Year 2020.

This is an excellent sign of the company’s financial performance.

Finally, one of their potentially more interesting moves was the acquisition of Aviva Vietnam and developing its team in China.

MFC is a Strong Dividend Performer

The company’s quarterly performance has been strong, which means it can reward investors with a higher dividend payout. Consequently, the company’s stable cash flow should allow it to continue rewarding investors with increased dividends.

Additionally, the population of older people globally will provide a key driver for MFC in the future. Growing demand for life insurance and increasing interest rates spell impending growth for our company.

Now, of course, there is the possibility that MFC or any other company might cut its yield. However, considering Manulife’s long-term stability and consistency, it’s unlikely this will happen to it.

As the interest rates on 10-year bonds keep going up, it’s not hard to find certain stocks that will do well from this statistic. Manulife, for instance, has a lot of potential for people looking for return and yield.

The company has a payout ratio of ~36%, which means it can afford to hike its dividend often since the number is very conservative. You should also consider Manulife’s dividend yield of 4.9% – which is excellent for its sector. You can see from the chart above that this yield is healthy and steadily moving upwards, a strong sign for the company.

Wall Street’s Take

Manulife Financial’s mood on Wall Street is slightly bullish, with a Moderate Buy consensus rating based on four Buys and five Holds in the last three months.

The average Manulife Financial price target of $25.12 implies 16.7% upside potential.

The Bottom Line

This is a good opportunity for long-term investors: Manulife has a high yield and an international pedigree. It’s trading at a discount, making it an even more attractive choice for your portfolio.

The stock has a low valuation, a solid balance sheet, and a good outlook for growth. For people looking to buy something safe, this is a stock to consider for the long term.

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