Manulife Financial (MFC.TO)

Sell, switch to Canadian banks?

Still likes it and new management. Took a long while to restructure US annuity business and reduce risk. Asian business seeing some positivity in sentiment, wait to see if this translates into results. Giant overhang for years. Underlying horsepower still good, dividend strong relative to sector. Opportunity for management to take good assets and transition them to a better day. Well run. Right now, bit worried about the banks' credit risks in a recession, so he likes that insurers diversify away from that. He's 15% banks, 5% insurance. 

MFC vs. SLF

Both high quality, good balance sheets, strong management. Both attractive value right now. MFC is 8x earnings, SLF is 11x. Asian business is a differentiator, which both have. MFC is much more international, with 80% of revenues from outside Canada, and 50% from Asia. Covid has slowed Asia, but when it bounces back, MFC should benefit a bit more. MFC yield slightly higher. Long term, you'll do well in both. 

Allan Tong’s Discover Picks

Consider this a trade at best, with an income kicker. MFC stock pays a steady 5.05% dividend, exceeding even Canadian banks like TD. Also working in its favour is the fact that the insurance stock trades at a low 6.95x PE and enjoys robust daily volumes of 7.3 million shares. Its Asian operations will enjoy a boost now that China is reopening, an area to watch. Read 4 Insurance Stocks to Stay Safe in a Risky Market for our full analysis. 

Financials do well now into mid-April. MFC could be a good long-term hold. MFC is performing well now and could return to $28. If it break above $28, MFC could do very well.

Why doesn't it trade higher? Over the last year, an investor would rather hold a bank that had never cut its dividend, instead of MFC, which has cut in the past. So MFC won't see the same multiple in uncertain economic times such as now. Going forward, lots of promise. In Asia, a big growth area. Won't have same bank issues with net interest margin or bad debt. Should do well on the other side of a recession. Valuation fairly good, dividend not likely to be cut anytime soon. He's looking at it.

(A Top Pick Jan 12/22, Up 4%) Very good cashflow dividend of 5.2% today. Trades below book value, .95 price to book. Outpacing TSX since last May, a good technical sign. Remains a top 3 pan-Asian life insurer. Growth of middle class long term a definite positive. Looser China Covid rules will spur sales. Keep holding.

Trading at less than its book value, it is very inexpensive. Investors are worried about how insurance companies will do next year under the new accounting regime standards, which will greatly affect the way they book profits and new business. But MFC won't change the way they manage their reserve requirements. This an accounting change, not necessarily a real world change. There is a lot of legacy business left over and this has helped to cause MFC to lag. If this is taken out of the long term care business, as well as low ROE business in the U.S., the stock should start to go up. Buy 7 Hold 8 Sell 1 (Analysts’ price target is $26.21)

Below NAV. With bond yields recovering, lifecos are finally back in the sweet spot of making money on investments. Spreads on unearned premiums are going to increase, so analysts should redo their models. China is opaque, mysterious, and that makes him nervous. Compelling buy at these prices.

Dividend play with its 5.5% yield. Most exposure to Asia among peers, a drag the last year. Asia and China are opening up, starting to be a tailwind again. Likes it at current levels.

Seemingly a great business, but look at how good it is at reinvesting into the business over the long term. Unable to show they can deliver sustainable higher ROE. Nice dividend, safe. He prefers more growth, such as TSU or IFC.

Really likes it for the dividend of 5.56%. Safe dividend. Below book value at 0.9x. Starting to break out a bit. Be patient. As the macro improves in 2023-24, shares in the insurance market should improve also.

Lifecos are entering reporting season. Investors will look to see how Asian sales impacted in recent environment. Extremely well-financed. Dividend certainly secure, likely to grow. He'd recommend today as a good, long-term hold.

MFC vs. SLF vs. TD All financials got beaten up. Issue with banks is potential loan losses, and if it's a deep recession, loan losses can get bigger. A lot of financials can be a black box, and you don't see the damage until it's too late. Impressed by what MFC has done over time, nice dividend yield. All financials are starting to look interesting. Banks look attractive valuation-wise, but he'd wait.

Likes company with strong dividend (expecting rise in the future). Past troubles of the business has led to conservative balance sheet. High interest rates good for insurance companies. Competition from bond yields impacting value of shares.

His favourite lifeco is GWO. MFC is well run, but has a different regional focus, China, higher-grown and emerging. Valuation trades near book value and pays around a 6% dividend. There's tremendous value in lifecos. MFC ticks all the boxes.