3 Top Insurance Stocks to Buy Today

Intact Financial Corporation (TSX:IFC), Manulife Financial Corp. (TSX:MFC)(NYSE:MFC), and Great-West Lifeco Inc. (TSX:GWO) are three of the market’s top insurance stocks. Should you buy one of them today?

| More on:
The Motley Fool

Intact Financial Corporation (TSX:IFC), Manulife Financial Corp. (TSX:MFC)(NYSE:MFC), and Great-West Lifeco Inc. (TSX:GWO) are three of the world’s largest providers of insurance products and services, and all of their stocks represent attractive long-term investment opportunities today. Let’s take a closer look at each, so you can determine which would fit best in your portfolio.

1. Intact Financial Corporation

Intact Financial Corporation is Canada’s largest provider of home, auto, and business insurance.

At today’s levels, its stock trades at just 14.8 times fiscal 2015’s estimated earnings per share of $6.01 and only 13.5 times fiscal 2016’s estimated earnings per share of $6.61, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 15.6 and its sub-industry average multiple of 17.9.

I think Intact Financial’s stock could consistently trade at a fair multiple of at least 15, which would place its shares upwards of $99 by the conclusion of fiscal 2016, representing upside of more than 11% from current levels.

In addition, the company pays a quarterly dividend of $0.53 per share, or $2.12 per share annually, giving its stock a 2.4% yield. It is also very important to note that it has raised its dividend for 10 consecutive years.

2. Manulife Financial Corp.

Manulife Financial Corp. is one of the world’s largest providers of financial products and services, including life, critical illness, disability, and long-term care insurance.

At current levels, its stock trades at just 12.1 times fiscal 2015’s estimated earnings per share of $1.74 and only 10.2 times fiscal 2016’s estimated earnings per share of $2.06, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 98.7 and its sub-industry average multiple of 23.5.

I think Manulife’s stock could consistently trade at a fair multiple of at least 13, which would place its shares upwards of $26 by the conclusion of fiscal 2016, representing upside of more than 23% from today’s levels.

Additionally, the company pays a quarterly dividend of $0.17 per share, or $0.68 per share annually, giving its stock a 3.2% yield. Investors should also note that it has raised its dividend for two consecutive years.

3. Great-West Lifeco Inc.

Great-West Lifeco Inc. is one of the world’s largest providers of financial products and services, including life and health insurance.

At today’s levels, its stock trades at just 12.5 times fiscal 2015’s estimated earnings per share of $2.79 and only 11.8 times fiscal 2016’s estimated earnings per share of $2.96, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 13.1 and its sub-industry average multiple of 23.5.

I think Great-West Lifeco’s stock could consistently trade at a fair multiple of at least 13, which would place its shares upwards of $38 by the conclusion of fiscal 2016, representing upside of more than 9% from today’s levels.

In addition, the company pays a quarterly dividend of $0.326 per share, or $1.304 per share annually, giving its stock a 3.75% yield. It is also worth noting that it raised its dividend by 6% in February, but this was only its first increase since 2008.

Which of these top insurance stocks belongs in your portfolio?

Intact Financial, Manulife Financial, and Great-West Lifeco are three of the top investment options in the insurance industry today. All Foolish investors should take a closer look at each and strongly consider initiating positions in one of them in the trading sessions ahead.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joseph Solitro has no position in any stocks mentioned.

More on Investing

Target. Stand out from the crowd
Investing

2 Canadian Stocks I’m Buying Lots of This Year

I’m looking to snatch up exciting Canadian stocks like VieMed Healthcare Inc. (TSX:VMD) throughout 2023.

Read more »

grow money, wealth build
Dividend Stocks

Got $3,000? 3 TSX Growth Stocks to Buy in January 2023

Top TSX growth stocks that look appealing for 2023.

Read more »

woman data analyze
Dividend Stocks

Need Passive Income? Turn $15,000 Into $851 Annually

This passive-income stock is already climbing higher, up 16% in the last three months! Yet it's still valuable, so you…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

Retirees: 3 Reliable Canadian Dividend Stocks to Buy Now for Passive Income

Top TSX dividend stocks now appear oversold.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Investing

2 TSX Stocks Safer for Investing in a Recession

These consumer companies will likely beat the broader market averages amid a recession. These stocks offer stability, income, and consistent…

Read more »

Dividend Stocks

For $100 in Passive Income Each Month, Buy 1,500 Shares of This REIT

REITs such as Northwest Healthcare can enable investors create a passive-income stream as well as benefit from capital gains.

Read more »

A colourful firework display
Dividend Stocks

2 Canadian Growth Stocks (With Dividends) to Start 2023 With a Bang

Here are two of the best dividend-paying Canadian growth stocks you can invest in at the start of 2023 and…

Read more »

sale discount best price
Dividend Stocks

4 Insanely Cheap Canadian Stocks to Buy for Passive Income

The recent bear market has created some incredible bargains, especially for those looking for passive income. Here are four cheap…

Read more »