Lorne Steinberg Sun Life Financial Inc SLF-T BUY Aug 05, 2025

Start with valuation -- 10x 2026 for 12% growth. A few bad quarters with a weaker US, which caught market by surprise. Outlook improving. Worst-case on the tariff war (which is not his base case), there will be less $$ floating around to buy insurance products. 

Don't buy this name right now. Longer term you're fine. Steady compounder, safe dividend that will grow. Instead, he'd buy MFC on its cheaper valuation (which, for him, makes it safer).

Their last quarter was penalized due to some stop-loss insurance on their books and a small impairment from an investment in Vietnam and softer flows at MSF, their US investment arm. Is now in a range worth buying. This and MFC remain core holdings of his. It yields a safe 4.13%

Now is a good time to take some money off the table. Financials have outperformed the fundamentals in the next few years. Wait for a better entry point, when the market dips as it did in early April, which he expects in the near future. Good company, track record and dividend. No problem with SLF fundamentally.

Chart looks great. Above 200-day and 200-week MAs, which are both moving higher. Not explosive growth, but steady eddy instead. 11-12x forward PE. Pretty decent dividend of 4%.

Insurance is the space to be, but is this the one to buy? Had some challenges with US side, though beat recently and trends are starting to be more encouraging. Really nice dividend. 9.5% growth rate, trading at 10.5x PE for 2026.

If you own it, hold. But for new $$, he'd prefer MFC or POW.

MFC is such a complex company, really hard to figure out. If he can't figure it out, he just stays away. If you compare the two right now, SLF is incrementally more profitable and more transparent. Nothing compelling about the price.

If you own, hold on. Yield curve is somewhat favourable to them as it's normalizing (with short rates dropping and long rates staying put here and in US). Valuation is fine, below the banks. Delivered on last 2 quarters. Not much growth. MFC has done better job expanding in Asia. Decent yield.

Beat EPS estimates today. (MFC had a lower week as well.) High quality. Long term, exposure to Asia and aging demographic make a lot of sense. 10x forward PE, not bad. Nice yield of 4.5%, especially in falling interest rate environment, and expected to grow 8-9% annually. Could be an opportunity.

SLF reported an underlying EPS of CA$1.79, in line with expectations of CA$1.78. Underlying Return on Equity (ROE) declined slightly to 17.6% from 18.1% in the same quarter last year. The financial leverage ratio remains healthy and in line with historical averages. SLF’s results across segments demonstrated healthy growth, except its asset management & wealth segment, where income was in line with the prior year and assets under management (AUM) growth was only 5%. The company spent $400M on share repurchases during the quarter. The share price is under pressure as SLF mentioned the company could miss its 2025 profit target for its dental business in the U.S. due to the uncertainty around Medicaid funding. Overall, results were not that impressive; that being said, it is just one weak quarter. We think the long-term thesis of SLF as a high-quality dividend growth insurance name is still intact.
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