Sun Life Financial Inc (SLF.TO)

Both this and Manulife (MFC-T) have had a terrific 2^nd half of 2013 and the beginning of this year. They are at about the same multiple as Canadian banks, but don’t have that much growth. He would prefer Canadian banks instead, and US banks even more.

A great company with a commanding position in its business and one of the top 3 insurers in the country. The single ‘A’ bond space does not command that high a yield. Get the equity in a bear market for interest rates.

He added to SLF-T instead of PWF-T. PWF-T is a group of companies. SLF-T has the strongest domestic franchise. He just recently added to his position.

He sold some recently because he felt it might go sideways over the next while. Well run company, but thinks there is more upside in the banks right now. Unlikely to increase the dividend for the next while.

Manulife (MFC-T) or Sun Life (SLF-T)? These are equal as to which one he likes. You have got to love the insurance companies. 2.5 years ago they were both coming out of the blue (his strategy). He has been holding both and they are both great. Thinks they will both do well.

He is warming up to life companies. They will do well. Domestic insurance business is starting to grow again. He feels this company is the best at that business. They have the highest percentage in the wealth management side.

Banks have been getting all the love. The TSX financial services broke to new highs two days ago. RY came out with great numbers but there was only selling on news. SLF is doing okay.

Financials are still leading. You are not going to have a Bull market in place without the participation or leadership from the financials. The leadership is kind of waning, but we still have participation, which is very important. The environment is right if rates creep up a little bit, which he anticipates they will. The trend is still there, so you are fine.

He likes life insurance. This is a good company. You pick your favourite and check it out.

He has switched from lifecos to the banks because lifecos have had a pretty good run this year. They benefit a lot from rising interest rates, and he is a little concerned about the next quarter’s earnings. Thinks the valuation is a little bit rich right now.

(A Top Pick July 31/13. Up 28.35%.) This has gone up partly because people expect interest rates to go up, and life insurance companies are sensitive to that. Also, their money management division is doing well. Like other big financial stocks, the search for yield has helped them.

Thinks this will do well in a rising interest rate environment in the next several years, as life insurance companies do well where they can reinvest their float in a higher interest rate environment and generate higher earnings. Attractive from a balance sheet perspective.

This will get benefits from higher interest rates, which he thinks are coming at some point. Decent earnings growth in the 10%-12% range. Nice dividend. Prefers Manulife (MFC-T) because of their Asian exposure.

Believes interest rates are going to go up at some point. He gets more leverage through a lifeco to an increase in interest rates, than he would from a bank. Very good capital discipline. He can see the 3.59% dividend starting to grow. Also, has exposure to Asia.

Good company. Well run. About 3.5% dividend yield. They are trading at the higher end of their range of 1.5X Book. ROE will be lower than the banking sector because of the rate environment.