Sun Life Financial Inc. (TSX:SLF): Should You Buy the Stock on the Dip?

Sun Life Financial (TSX:SLF) has pulled back from the 2018 highs. Is it time to add the stock to your portfolio?

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Sun Life Financial (TSX:SLF)(NYSE:SLF) is down about 10% in the past three months.

Let’s take a look at the current situation to see if this is the right time to add the company to your portfolio.

Earnings

Sun Life reported solid Q2 2018 results. Underlying net income came in at $729 million compared to $689 million in the same period last year. Underlying earnings per share rose to $1.20 from $1.12. Return on equity increased to 13.5% from 11.4%, and assets under management rose 4% to $986 billion.

Sun Life primarily operates insurance and wealth management businesses in Canada, the United States, and Asia. The company also has operations in the United Kingdom.

The net income distribution is reasonably balanced, with Sun Life Canada contributing 31%, Sun Life Asset Management supplying 28%, Sun Life Asia providing 19%, Sun Life U.S. adding 16%, and Sun Life U.K. pitching in 6%.

For the quarter, insurance sales rose 12% to $633 million, compared to Q2 last year. Sun Life Asia led the way with a 33% gain in individual sales, supported by strong growth in China and India. Sun Life Canada saw a surge in large case sales in group benefits, as well as individual insurance, providing a 16% year-over-year gain. Sun Life U.S. sales dipped 2% due to lower employee benefit large case sales.

Wealth management sales had a rough quarter compared to last year, dropping by 16% to $30.8 billion. Asia saw a 9% decline, Canada slipped 20%, and Sun Life Asset Management sales, which include the U.S.-based MFS operations, fell 12%.

Opportunities

Rising interest rates should be a net benefit for Sun Life, as they boost the return the company can get on the funds it sets aside in fixed-income investments to cover potential claims.

Long-term growth potential in Asia is probably the main reason to consider the stock. Sun Life has strong established partnerships or subsidiaries in India, China, Indonesia, Malaysia, Vietnam, and the Philippines. As the middle-class grows in these markets, Sun Life should see increased demand for insurance and wealth management products.

Dividends

Sun Life pays a quarterly dividend of $0.475 per share for a yield of 3.7%. The company is targeting medium-term earnings per share growth of 8-10%, so investors should receive steady increases in the distribution.

Should you buy?

Another meltdown in the equity markets would be negative for the stock, which must be considered when evaluating the company. However, Sun Life is less exposed today than it was when the Great Recession hit due to the sale of the U.S. annuities business that caused much of the grief during the downturn.

The dip in the stock from close to $56 in May to the current price around $51 should be a good buying opportunity for a buy-and-hold RRSP or TFSA portfolio.

Should you invest $1,000 in Bank of Montreal right now?

Before you buy stock in Bank of Montreal, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Bank of Montreal wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Andrew Walker has no position in Sun Life.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

analyze data
Dividend Stocks

How I’d Invest $28,000 in Canadian Natural Resource Stock to Amass Personal Wealth

Investing in TSX dividend stocks such as Enbridge can help you earn a passive-income stream in 2025.

Read more »

hand stacks coins
Dividend Stocks

Got $400? How I’d Start Building Income With 3 High-Yield Stocks for the Long Term

These high-yield dividend stocks have a solid payout history, making them compelling investments to generate passive income.

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

I’d Put $15,000 in These 3 Dividend-Growth Champions for Increasing Income Potential

Want to offset some volatility? Here are three defensive dividend-growth champions that can generate a juicy yield right now.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

Transform Your TFSA Into a Cash-Creating Machine With $7,000

Discover how the Tax-Free Savings Account can be your golden goose for generating cash without losing your investment.

Read more »

monthly desk calendar
Dividend Stocks

How I’d Invest $10,000 in Canadian Value Stocks for Monthly Dividend Income

A $10,000-diversified portfolio of value stocks focusing on dividend safety, yield, growth, and payment schedules can provide a reliable source…

Read more »

a person watches a downward arrow crash through the floor
Dividend Stocks

Is This Correction Your Chance? Top 4 Canadian Dividend Stocks on Sale

Stocks may be down, but now is your chance to get some of these top dividend stocks on sale.

Read more »

Confused person shrugging
Dividend Stocks

Where to Invest $2,500 in the TSX Today

These TSX stocks offer attractive dividends and a shot at decent upside on a rebound.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Invest $25,000 in These Dividend Stocks for $1,956.66 in Annual Passive Income

Dividends stocks can make a huge difference, even if shares don't move an inch. And these might be the best.

Read more »