Manulife Financial Corp. (TSX: MFC)(NYSE: MFC) is a unique type of investment that continues to draw in a lot of skeptics. One on hand, the saturated domestic insurance market in Canada offers little growth prospects to the company, as there’s only so much cross-selling the market can handle, and Manulife already has a third of all Canadians as clients. While that may sound limiting in terms of growth, Manulife more than compensates with the incredible growth the company continues to see from markets in Asia.
What does Manulife offer investors?
Manulife offers an intriguing mix of both growth and income potential for long-term investors.
On the growth side, Manulife’s well-known expansion into the Asian market was nothing short of brilliant. Over the past few years, Manulife set up strategic partnerships with financial companies operating in Asian markets, effectively becoming the exclusive provider of financial products for those institutions.
Growth from the Asia region continues to be one of the primary sources of growth for Manulife, with double-digit growth in earnings of 21% registered in the most recent quarter.
That’s not to say that the Canadian market has been completely ignored.
Last month, Manulife announced the formation of a medical marijuana program through a partnership with Shoppers Drug Mart, which is owned by Loblaw Companies. In short, pharmacists from Shoppers will help Manulife subscribers become informed of the different strains of medical marijuana, how it can be consumed, and whether it is covered by their Manulife plan.
With well over 230,000 medical marijuana patients in Canada, the deal could provide an onslaught of business, and Manulife partnering with the largest pharmacy chain in the country could prove beneficial for business.
Finally, there’s the float.
Insurers such as Manulife receive premiums from their subscribers. Those premiums are used to pay out claims that subscribers make. The difference between the premium and the claim is the float, and that amount is typically invested by the insurer to draw in even more earnings for the company.
In the case of Manulife, that float can amount to billions, and, more importantly, a slight increase in interest rates could spell millions more over the long term.
Manulife can be a great long-term income investment, too. The company currently provides a quarterly payout of $0.22, which, at the current stock price, amounts to a very respectable 3.69% yield. In terms of growth, Manulife has steadily raised its dividend over the past few years on a nearly annual basis, with the most recent uptick coming earlier this year.
Should you invest in Manulife?
While Manulife has stated its intent to smooth out the insurance process and embrace new technologies, such as blockchain, these are initiatives that will take time. Unfortunately, this may deter some potential investors from considering the stock, which is a great investment to include in any portfolio suited for both growth- and income-seeking investors looking at the long term.
