When it comes to investments in the financial sector, bank stocks usually steal the limelight in Canada. This is especially true for dividend investors, but they are great picks, even from a growth perspective.
However, they are not the only financial stocks that offer a good mix of growth, dividends, and stability. Insurance is a sizable industry within the Canadian financial sector, and at least three Canadian insurance stocks are worth considering.
This is especially true if you want buy-and-hold stocks to build wealth over time in your Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP).
An insurance stock for dividends
If you are looking for dividend-based returns, Manulife Financial (TSX:MFC) is a great pick. It’s one of the largest life insurance companies in the world and has a massive international presence, and the business model is not solely reliant upon life insurance. It has diversified into group benefits, retirement, and wealth management and has a company in 12 different global markets.
The stock ticks multiple boxes as a good dividend stock. It’s an established Aristocrat that has grown its payouts for eight consecutive years and is currently offering dividends at a 5.1% yield. The dividends are backed by a solid payout ratio of about 35.2, which hasn’t jumped over the 100% mark in the last 10 years. The dividend growth is decent enough — 50% since 2018.
An insurance stock for growth
Another insurance company that’s also a Dividend Aristocrat is Intact Financial (TSX:IFC). It’s an even more established Aristocrat and has raised its payouts for 17 consecutive years. Even though the 2% yield is by no means paltry, the dividends aren’t the reason most people are attracted to this particular insurance company. That credit goes to its growth potential.
It has grown by over 200% in the last decade. That’s about 20% growth a year and enough to double your capital every five years, assuming it keeps growing at this pace. It’s also the property and casualty insurance leader in Canada and has a presence in multiple international markets, including the U.S.
An insurance stock for a good mix of growth and dividends
The third insurance stock you should consider adding to your portfolio is Sun Life Financial (TSX:SLF). Like Manulife, it has multiple business avenues, including insurance, investments, and asset management. Traditional insurance now only makes up a relatively small portion of its revenue/financial mix. It has a presence in 27 markets and about $1.27 million in assets under management (AUM).
The stock offers a good mix of stability, capital-appreciation potential, and dividends. The stability comes from its business model, a mature market presence, and diversification in both geographies it operates in and its revenue streams.
As for the capital-appreciation potential, the stock has risen by about 129% in the last 10 years. That’s roughly 13% growth every year. The dividends seem quite attractive as well, with a 4.3% yield and a payout ratio under 50%.
The three large-cap, blue-chip stocks can give your portfolio a significant boost. You can keep them in your registered accounts for decades and let them slowly build your wealth. Choosing a dividend-reinvestment plan and adding to your position whenever the companies are discounted can expedite the process.