Wealth Generation Is the Cornerstone of This Stock

Manulife Financial Corp. (TSX:MFC)(NYSE:MFC) has developed an image of a wealth builder. Investors can start building wealth at the current cheap price.

| More on:

Investors have an affinity for one of Canada’s largest insurance companies, which has a lion’s share of the insurance market. The success of Manulife (TSX:MFC)(NYSE:MFC) is likewise resonating in Asia. This insurer and financial advisor is flexing its financial muscle in this part of the world.

Dividend Aristocrat

The shares of Manulife haven’t really sizzled in 2019, although the 7.48% increase from the year-end price of $19.37 isn’t disappointing for loyal investors. For five consecutive years, the Canadian insurer has raised dividends, and further dividend growth is anticipated in the years ahead.

This is Manulife’s excellent feat and redemption after its dividend stagnated during the post-financial crisis period. Investors are visibly pleased, because the 4.76% dividend yield adds generously to their passive income. Experts predict Manulife’s compound annual growth rate to reach 15.3% in the next three to five years.

Industry prominence

The Toronto-based insurer has successfully captured 33.33% of the domestic insurable market. Hoping to achieve the same success, Manulife brought the business overseas. Since 2014, business has been flourishing in the Asian continent. Any decline in the local market can be offset by the double-digit growth abroad.

Meanwhile, the Wealth & Asset Management business is the bedrock of Manulife. It’s the main reason why this insurance company and financial services provider is also among the world’s largest fund managers. To the rapidly growing middle class, the catchphrase “wealth generation” is synonymous with Manulife.

When you visit Asia, you will see that the more established financial institutions have strategic tie-ups with Manulife. The insurance and financial products are well received in the regional markets the company serves.

Today, more customers are being added to Manulife’s 26 million clients worldwide. The strategy is to concentrate on high-return businesses and leverage the scale of operations at the same time. The company’s endeavours in the international markets are extremely fruitful.

Catalyst for growth

Aside from the significant contribution of the international business to earnings, a rising interest rate scenario favours Manulife. You don’t have to be a finance wizard to figure out why that is so in the finance and insurance sectors.

Investors should bear in mind the interest rate risk associated with insurance companies. Historically, the profitability of an insurance company is likely to increase in an environment of rising interest rates. The price-to-earnings ratios of stocks in the insurance sector usually increase in direct proportion to interest rate hikes.

Stock for wealth generation

Eagle-eyed investors have a penchant for stocks with active- and passive-income potentials. Manulife fits that bill. Just look at the company’s ascendancy to prominence. The company is due to report its latest quarterly earnings, and a Valentine surprise might be in the offing.

Given the successes of Manulife, it would be a good time to start building wealth at the price of $20.79 per share. This Dividend Aristocrat is all yours for the taking.

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 Christopher Liew has no position in any of the stocks mentioned.

More on Investing

hand stacks coins
Energy Stocks

This 5.3% Dividend Knight Has Raised Payouts for 25 Consecutive Years 

The Canadian stock market is a gold mine for high-yield dividend stocks that offer consistent dividend growth for decades.

Read more »

space ship model takes off
Tech Stocks

Where I’d Put $1,000 Right Now in 2 Top Canadian Growth Stocks

Let's get into growth, and why these two top Canadian stocks offer it up in spades.

Read more »

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

1 Magnificent Dividend-Growth Stock Down 16% to Buy and Hold for Decades

This company raised its dividend in each of the past 25 years.

Read more »

Paper Canadian currency of various denominations
Bank Stocks

Is Scotiabank Stock a Buy Before May 27?

With the next earnings just around the corner, here’s what investors should know about Scotiabank’s (TSX:BNS) recent run and future…

Read more »

happy woman throws cash
Dividend Stocks

Where I’d Invest $3,200 in the TSX Today

TerraVest Industries is a top TSX stock that has delivered market-beating returns in the past two decades.

Read more »

sale discount best price
Dividend Stocks

Is This Correction Your Chance at 4 Passive-Income Stocks on Sale?

These top Canadian stocks offer a great opportunity as analysts continue to upgrade one after another.

Read more »

Dividend Stocks

Boost Your Monthly Income With These 3 High-Yielding REITs

These three REITs are ideal for income-seeking investors, given their stable cash flows and healthy dividend yields.

Read more »

oil pump jack under night sky
Energy Stocks

Canadian Energy Stocks: Undiscovered Gems Ready for Summer 2025 Rally

TSX energy stocks such as Canadian Natural Resources and Tourmaline Oil are poised to deliver outsized gains to shareholders in…

Read more »