Sun Life Stock: A Cheap Dividend Stock That Deserves Your Attention

Sun Life stock (TSX:SLF) ticks pretty much all the boxes. It’s cheap with a high dividend, and strong future growth pretty much locked in.

| More on:
analyze data

Image source: Getty Images

There are a lot of stocks on the TSX today that deserve investor attention. Practically every stock out there is trading down from 2022 highs, and that may not end anytime soon. However, there are few that really deserve your immediate attention. One of them is Sun Life Financial (TSX:SLF)(NYSE:SLF).

It’s cheap

Sun Life stock is cheap right now in a number of ways. Sure, its shares are lower than they were earlier this year, down 17% year to date. But that mainly comes with the territory as an insurance, wealth management, and asset management firm. Yet in the case of Sun Life stock, it has plenty of cash on hand to cover its debts and keep up with dividend payments.

And the company is cheap in so many ways. Right now, Sun Life stock trades at a valuable 8.88 times earnings. It would take just 30% of its equity to cover its total debts. And as mentioned, it’s well below 52-week highs and currently trades below its 50-day moving average in share price.

Taking all this together, Sun Life stock is a strong company to consider. But it gets better.

Its dividend

Sun Life stock also boasts a strong, stable, and high dividend yield at 4.84%. That comes out to $2.76 per share annually. Plus, it’s been growing consistently. The cheap stock currently offers investors a compound annual growth rate (CAGR) of 6.72% as of writing.

And let’s put the cheap stock back into perspective here to. Let’s say you purchased $10,000 in Sun Life stock at its 52-week highs of $74 per share. That would have provided you with dividends of about $368 per year. Yet if you buy today, that same investment would fork over about $486! That’s a difference of $122 in your pocket each year, no questions asked.

Its growth

Now, here’s the big part. It’s all well and good to invest in a company while you can look forward to some near-term growth. But Motley Fool investors know that you should always be investing in a company that you’re willing to hold long term. In this case, Sun Life stock is still a great buy. It’s been around for decades, increasing its dividend but also growing and share price and its business ventures.

In the past 20 years, Sun Life stock has grown by 368%. That comes to a CAGR of 7.78% during that time. If we use this as a guideline, we can identify where some like stock might be in another 20 years based on the $10,000 investment. So, let’s look at that based on if you had purchased it at 52-week highs, or at today’s prices.

In the former case, a $10,000 with dividends reinvested could be worth $88,773 at those higher levels. But today, if you were to purchase at $10,000, I would take into consideration the downturn. If you purchased at $56 and saw it recover to $74, that would increase your shares to $13,759 alone. From there, let’s go back to historical performance. In another two decades, you could have a portfolio worth $122,309!

Bottom line

As the saying goes, it’s not about timing the market but about time in the market. However, with Sun Life stock you could lock into both right now. You can get a cheap stock price that could see shares rebound to 52-week highs in the next year. From there, you can look forward to strong future growth that could lead to an explosive portfolio.

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Gas pipelines
Dividend Stocks

Is Enbridge the Best Dividend Stock for You?

Enbridge now offer a dividend yield of 8%.

Read more »

Dividend Stocks

How Long Would It Take to Turn $20,000 Into $100,000 With TSX Dividend Stocks?

Here's how a historical investment in TSX dividend stocks would have fared.

Read more »

edit Businessman using calculator next to laptop
Dividend Stocks

Passive Income: How Much Should You Invest to Earn $100 Every Month

Want to earn an extra $100 per month in investment passive income? Here's how much cash you would need to…

Read more »

Canadian Dollars
Dividend Stocks

Buy 1,430 Shares of This Super Dividend Stock for $1,000/Year in Passive Income

Here's how to generate $1,000 in annual passive income with Dream Industrial REIT (TSX:DIR.UN) stock.

Read more »

A worker gives a business presentation.
Dividend Stocks

Ranking Inflation Rates in Canada: How Does Your City Stack Up?

Inflation rates stoked higher for some cities, but dropped for others. So let's look at how your city stacked up,…

Read more »

Doctor talking to a patient in the corridor of a hospital.
Dividend Stocks

Inflation Is Up (Again): What Investors Need to Know

Inflation ticked higher in Canada this month, but core inflation was lower. Here's how investors can take advantage during this…

Read more »

Happy family father of mother and child daughter launch a kite on nature at sunset
Dividend Stocks

Want to Make $10,000 in Passive Income This Year? Invest $103,000 in These 3 Ultra-High-Yield Dividend Stocks

Can you earn $10,000 in passive income in 2024? You can by investing $103,000 in these ultra-high-yielding stocks.

Read more »

Payday ringed on a calendar
Dividend Stocks

1 Under-$50 Dividend Stock to Buy for Monthly Passive Income

First National Financial (TSX:FN) is a high-yield monthly-pay dividend stock.

Read more »