Got $1,000? Buy This Top TSX Stock Today

Here’s why I think Manulife Financial Corp. (TSX:MFC)(NYSE:MFC) could be a great place to park $1,000 right now.

| More on:
analyze data

Image source: Getty Images

For those with a few extra bucks looking for a top-notch TSX stock to buy today, you’ve come to the right place.

I’m going to discuss why I think Manulife Financial (TSX:MFC) is a great pick right now.

Rotation to value stocks underway

Fellow Fool contributor Joey Frenette highlights in a recent piece why he thinks Manulife could outperform.

He wrote, “With investors anticipating higher inflation and interest rate hikes, I think fears could spiral, and growth stocks could take on even more damage. Regardless, I’d look to nibble on shares of your favourite growth companies on the latest dip if it turns out that this tech correction is closer to a bottom than its peak. At the same time, it would be wise to scoop up the deeply discounted ‘value stocks’ if you’re overweight growth and have taken on more damage than you’re comfortable with over these past two weeks of vicious selling.”

I have to agree. There’s certainly the potential growth stocks could continue to slide. Rising inflation expectations are rational, and the market is doing what it does best — repricing asset values.

If this trend continues, which it just might, value stocks like Manulife could do very well.

Why is Manulife a value stock?

Some may argue that Manulife is fairly valued right now, given the level of risk in the economy. Well, if that were true, the valuation gap that exists today in financials stocks wouldn’t exist.

Indeed, Manulife is undervalued when one considers its historical ratios and where interest rates are today. Indeed, its stock price is still down more than 50% from its 2007 peak. Yes, this stock has more than fully recovered from the depths of the pandemic-induced selling. However, many could argue there’s a lot more room to run with Manulife stock.

The company’s relatively high dividend yield of 4.1% still remains a key opportunity for income investors. Particularly, those in or nearing retirement should consider companies like Manulife with significant yields. I think the company’s business model is one that provides for bond-like, stable income over the long term. Yes, bond yields have risen, but not to the point where it makes Manulife’s dividend look unattractive.

Bottom line

The market is overheated right now, and a rising tide lifts all boats. Manulife stock has been on an impressive run of late. Accordingly, many investors may question whether this momentum is sustainable.

However, I think the catalysts that are driving this stock higher are likely to persist. Indeed, this is a stock that still represents solid value and income for long-term fundamental investors.

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 Chris MacDonald has no position in any of the stocks mentioned.

More on Dividend Stocks

Payday ringed on a calendar
Dividend Stocks

2 Reliable Dividend Stocks to Earn $191/Month in Passive Income

After a strong start to the year, the TSX is going through another downturn. At writing, the S&P/TSX Composite Index is …

Read more »

edit Sale sign, value, discount
Dividend Stocks

3 Top Dividend Stocks That You Can Buy Under $50

The global equity markets have turned volatile over the last few weeks amid the fear that the U.S. Federal Reserve …

Read more »

ETF chart stocks
Dividend Stocks

3 TSX ETFs to Buy for Big Dividends

Dividend-paying exchange-traded funds (ETFs) are excellent investment options for passive investors. Apart from instant diversification, would-be investors earn in two …

Read more »

grow dividends
Dividend Stocks

3 of the Best Dividend Growth Stocks That Money Can Buy

Long-term investing has several advantages, which is why so many well-known investors like Warren Buffett recommend it as a strategy. …

Read more »

investment research
Dividend Stocks

3 Cheap Canadian Stocks to Buy Now Before the Dividend Deadline!

Motley Fool investors have been searching high and low for safe stocks in this volatile market. The TSX today doesn’t …

Read more »

Glass piggy bank
Dividend Stocks

How to Accelerate Your TFSA Returns From Dividend Stocks

The stock market saw a correction in January, as investors booked profits ahead of the central bank’s interest rate hikes. The TSX …

Read more »

money cash dividends
Dividend Stocks

Top 3 Dividend Stocks in Canada for 2022

Canada is home to some of the best dividend stocks in the world. With finance, telecoms, and energy dominating the …

Read more »

calculate and analyze stock
Dividend Stocks

2 Top TSX Stocks to Put on Your TFSA Buy List

TFSA investors are searching for undervalued TSX stocks to buy that have the potential to deliver big gains in 2022. …

Read more »