Sun Life Financial Inc. (TSX:SLF)(NYSE:SLF) has pulled back over the past three months, and investors are wondering if this is a good opportunity to start a position in the stock.

Let’s take a look at the company to see if it deserves to be in your portfolio.


Sun Life reported net income of $1.02 billion for the first half of 2016, down from $1.17 billion during the same period last year.

The company is doing reasonably well given the challenging economic environment, but low interest rates are hindering returns.

A number of macroeconomic factors, including the decision by the U.K. to leave the European Union, are putting pressure on global interest rates, and that trend isn’t expected to change much in the near term.

Sun Life is less sensitive to interest rate today than it has been historically, but falling rates still have a negative impact on results.


Sun Life is making good progress on the integration of acquisitions announced in 2015 and continues to invest for future growth.

In the wake of the financial crisis Sun Life sold off its troublesome U.S. annuities business and decided to focus on fee-based investments.

The company set up a new division, Sun Life Investment Management, and has made several purchases to beef up the new portfolio. Sun Life bought two businesses specializing in providing fixed-income solutions to pension funds and insurance companies, as well as real estate management firm.

The insurer and wealth manager is also betting big on overseas growth. The company recently increased its stake in its Birla Sun Life partnership in India from 26% to 49%. The Indian insurance market is expected to grow significantly in the coming years, and Sun Life is positioned well to benefit.

In Vietnam, the company has raised its ownership in a key partnership from 45% to 75%, and recently announced a significant pension acquisition in Hong Kong.


Sun Life currently pays a quarterly dividend of $0.405 per share. That’s good for a yield of 3.9%.

The company held its dividend steady during the Great Recession and began raising the payout again last year. Investors should see the distribution continue to grow as new assets begin to contribute more significantly to the revenue stream.

Should you buy?

Sun Life currently trades at 12.5 times trailing earnings, which puts the P/E ratio at a discount to the five-year average of about 14.

If you are looking for a pick in the financial space, but are concerned about the risks connected to the Canadian housing market, Sun Life might serve as a nice alternative to the banks. The stock also gives investors an easy way to play middle-class growth in Asia.

At some point, interest rates will begin to rise. When that happens, Sun Life should do very well.

Stock buy alert hits astounding 96% success rate!

The hand-picked investing team inside Stock Advisor Canada recently issued a buy alert for one special type of "bread-and-butter" stock where The Motley Fool U.S. has banked profits on 23 out of 24 recommendations. Frankly, with an astounding 96% success rate that has delivered average returns of 260%, chances are this new pick could deliver life-changing returns as well. Because the team at Stock Advisor Canada fully embraces the same time-tested investing philosophies that have led to countless Motley Fool winners globally. So simply click here to unlock the full details behind this new recommendation and join Stock Advisor Canada.

*96% accuracy includes restaurant stock recommendations from Motley Fool U.S. services Stock Advisor, Rule Breakers, Hidden Gems, Income Investor and Inside Value since each services inception. Returns as of 5/27/16.


Let’s not beat around the bush – energy companies performed miserably in 2015. Yet, even though the carnage was widespread, not all energy-related businesses were equally affected.

We've identified an energy company we think offers one of the best growth opportunities around. While this company is largely tied to the production of natural gas, it doesn't actually produce the gas. Instead, it provides the equipment required to get natural gas from the ground to the end user. With diversified operations around the globe, we think it's a rare find in the industry.

We like it so much, we’ve named it as 1 Top Stock for 2016 and Beyond. To find out why, simply enter your email address below to claim your FREE copy of this brand new report, "1 Top Stock for 2016 and Beyond"!

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