Advertisement
Canada markets open in 7 hours 7 minutes
  • S&P/TSX

    21,837.18
    -12.02 (-0.06%)
     
  • S&P 500

    5,149.42
    +32.33 (+0.63%)
     
  • DOW

    38,790.43
    +75.63 (+0.20%)
     
  • CAD/USD

    0.7372
    -0.0017 (-0.23%)
     
  • CRUDE OIL

    82.49
    -0.23 (-0.28%)
     
  • Bitcoin CAD

    88,287.84
    -4,594.71 (-4.95%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • GOLD FUTURES

    2,158.10
    -6.20 (-0.29%)
     
  • RUSSELL 2000

    2,024.74
    -14.58 (-0.72%)
     
  • 10-Yr Bond

    4.3400
    0.0000 (0.00%)
     
  • NASDAQ futures

    18,186.50
    -45.00 (-0.25%)
     
  • VOLATILITY

    14.33
    -0.08 (-0.56%)
     
  • FTSE

    7,722.55
    -4.87 (-0.06%)
     
  • NIKKEI 225

    40,003.60
    +263.20 (+0.66%)
     
  • CAD/EUR

    0.6783
    -0.0009 (-0.13%)
     

Sun Life Financial Inc.: Should You Buy the Pullback?

Sun Life Financial Inc. (TSX:SLF)(NYSE:SLF) is down 17% in the past six months.

Let?s take look at the global insurance and wealth management firm to see if it deserves to be in your portfolio.

Earnings

Sun Life reported underlying net income of $573 million for Q1 2017, representing a 2% drop from the same period last year.

Underlying ROE was 11.5% compared to 12.4% in Q1 2016.

Top-line growth was strong with a 58% increase in insurance sales and a 13% jump in wealth sales.

The Canadian and Asian businesses performed well, but weakness appeared in Sun Life?s U.S. business, and net outflows continued in the MFS Investment Management group.

ADVERTISEMENT

MFS had net outflows of US$11.1 billion in the quarter, which continued a trend from Q4 2016, where net outflows came in at US$9.5 billion.

Net outflows in Q1 2016 were US$1.1 billion.

The company says the net outflows are a result of institutional client rebalancing and a trend towards passive investing.

Assets under management across the company rose to $927 billion in the quarter compared to $903 billion in the first quarter last year.

Dividends

Sun Life just raised the dividend by 4% to $0.435 per share. That?s good for 3.9% yield.

Should you buy?

Weakness in the U.S. business is a concern, especially if the net outflow trend over the past two quarters at MFS continues or picks up steam.

That said, Sun Life?s other businesses are performing well, including the Asian operations, where most of the future growth is likely to come.

Sun Life?s global presence makes it an appealing play on the expanding middle class in India, Indonesia, Vietnam, China, and the Philippines, where it has subsidiaries or joint-venture partnerships.

The company should also benefit once interest rates begin to rise at a regular pace. Higher rates are normally good for insurance businesses because the companies can earn more on the funds they have to set aside for potential claims.

If you are looking for a financial pick to add to your dividend portfolio, but don?t want to own the Canadian banks right now, Sun Life is worth considering as an alternative. You get exposure to wealth management and insurance segments, while reducing direct risks connected to the Canadian residential housing market.

At the current valuation, Sun Life is attractive option in place of the banks; however, I would wait for the Q2 numbers to come out to see how the MFS group is doing before buying the stock.

Looking for a few great dividend-paying stocks to buy today?

If so, you're in luck! Because we just tapped one of our top analysts -- and experts in this field -- and asked him to put together a special report highlighting three of his favorite dividend-payers to buy right now.

These three "Cash Kings" have an average yield of 4.0%... are poised to profit from three diverse (and highly crucial) sectors of the economy... and look like they have the ability to grow their dividend well into the future.

For a limited time find out how you can get a copy of this brand new special report by clicking here.

More reading

Fool contributor Andrew Walker has no position in any stocks mentioned.

Looking for a few great dividend-paying stocks to buy today?

If so, you're in luck! Because we just tapped one of our top analysts -- and experts in this field -- and asked him to put together a special report highlighting three of his favorite dividend-payers to buy right now.

These three "Cash Kings" have an average yield of 4.0%... are poised to profit from three diverse (and highly crucial) sectors of the economy... and look like they have the ability to grow their dividend well into the future.

For a limited time find out how you can get a copy of this brand new special report by clicking here.

Fool contributor Andrew Walker has no position in any stocks mentioned.