Manulife Financial (MFC.TO)

Interest rates are a factor, but a bigger driver to the story is really the asset management side. They have really bulked up in this area, and it gets a tremendous amount of fund flows in. What you have to concern with is how the equity markets do. Dividend yield of 3.3%. From a dividend and a dividend growth perspective, this looks pretty good.

This company should be performing a lot better considering that 45% of their revenue comes from the US and they have a pretty good revenue line coming out of Asia. This is a sort of Hold in his portfolio, and he hopes it is going to benefit from a rising rate environment. It could easily be replaced in his portfolio with something else, when he finds something else.

Thinks this is a hold for 2 or 3 years. His model price is $27.34. He will watch to see how a rate increase will affect financials. He would Buy and Hold this, but would love to have it back at $18.80.

It bottomed when the market did so. It is forming a nice little triangle. It is outperforming the market and is showing signs of a nice recovery. It should be seasonally strong from January to April.

Prefers Sun Life (SLF-T) because it has a little bit higher dividend profile, and their growth rate seems to be a little bit more diversified. Likes the lifecos over the banks at this time, because of the rising interest rate environment, where they tend to benefit a little more.

Feels very good about lifecos. Prefers them to the banks. Lifecos will profit a lot when interest rates go up. Of the 3 major Canadian lifecos, this is his least favourite. Prefers Sun Life (SLF-T), followed by Great West Life (GTO-T) and then this. In the financial crisis, this company almost went down because of their exposure to the stock market and interest rates. Since then, they have deleveraged themselves, so they don’t have the same leverage, but he feels they have been taken down too much.

Great West Life (GWO-T), Manulife (MFC-T) or Sun Life (SLF-T) for the best upside? That’s a tough question, because he likes all 3. Insurance companies will do well in the economy he sees going forward. Lifecos have a little bit more torque on the upside with rising interest rates. Right now this would be his favourite.

The recent quarter was a mixed bag, and a lot of people didn’t see the write-downs coming in the energy investments they had. Overall, that is not a big deal. Management has well repositioned this company changing its product mix to be less market related. Their expansion in Asia has been particularly strong. Dividend yield of 3.19% and he is expecting more increases to come. Probably has one of the best balance sheets in the industry. If we end up in a market with rising interest rates, insurance companies benefit.

Manulife (MFC-T) or Sun Life (SLF-T)? He likes both businesses. They are great income producing stocks to own, just like a bank, that you want to own for the long-term. Valuation is not so cheap right now that you can make a large amount of money in a short period of time. He would choose this one because the institutional money managing business of Sun Life has been doing very, very poorly.

45% of their revenue is coming from the US, giving a nice FX tailwind. Growing really well in Asia, in the US and in Canada. Cheaper than its peers. Dividend yield of 3.15%.

(A Top Pick Sept 11/15. Up 7.52%.) In September there was a lot of concern about China. As soon as this happens, people sell the stock. In reality, only about 2% of their business is mainland China, the rest being Hong Kong and Japan. When rates start to move, that will be a positive. Also, a significant amount of business outside of Canada is going to be positive on currency translation.

Prefers Sun Life given its more diversified basket of operations. Sun Life looks a little bit stronger when you look at the charting and the fact that it is trending above moving averages and starting to break out. Manulife is a fine company and there is nothing wrong with it.

The first insurance company into the far east and this is going to be a tremendous growth area for any insurance company. They cut a deal about a year ago with a major distributor of financial products which could produce great benefits for them. Higher interest rates will benefit. Between the target price and dividend yield, he can see a 19% potential return. Dividend yield of 3.07%.

He liked insurance companies a whole lot better when there was a good possibility that US interest rates were going to be raised. Higher interest rates would have helped the insurance industry quite a bit. This stock has set back to a fairly attractive level. A small dividend of a little over 3%. It has lots of upside potential. Very reasonable PE. As an investment, it will probably work out okay.

There was a bottom in September. They took a while to work through the ’08 problems. He prefers SLF-T. MFC-T will run into resistance at $22.50. It might chew threw that, but this one does not have seasonality into November.