Better Buy: Manulife Stock or Sun Life Stock?

Manulife and Sun Life pay attractive and growing dividends.

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Manulife (TSX:MFC) and Sun Life (TSX:SLF) are leaders in the TSX insurance sector. The stocks are moving higher after the March market correction, and investors are wondering if more gains could be on the way.


Manulife has a current market capitalization near $48.5 billion. The stock trades around $26 per share at the time of writing. That’s up from $21 in November, but still below the 12-month high of about $27 the stock hit in early March before the financial sector crash sent the share price to $24.

Over the past five years, MFC stock is up about 7% and has bumped against a $27.50 ceiling several times. It will be interesting if the share price can break through that level this year.

Manulife gets its revenue from a broad range of services and across a global footprint. It operates insurance businesses in Canada and abroad under the Manulife brand and has a large wealth and asset management group operating as John Hancock, based in the United States.

Overseas, Manulife is growing its Asia business in an effort to capitalize on large populations with a growing middle class. As an example, Manulife bought out its 51% partner in TEDA Fund Management in mainland China last year.

The end of lockdowns in China and across Asia should help boost product sales in 2023.

Manulife delivered solid 2022 results. Adjusted net income came in at $7.3 billion, up marginally from 2021. Return on equity (ROE) was steady at about 14%. The company repurchased 4.1% of the outstanding stock last year and recently raised the dividend by 11% for 2023.

Investors who buy MFC stock at the current level can get a 5.6% dividend yield.

Sun Life

Sun Life has a current market capitalization of $38.3 billion. The stock trades near $65 per share at the time of writing. That’s up from $54 in October and not far off the $69 high it hit in February.

Over the past five years, SLF stock is up more than 20%. Sun Life has a similar footprint to Manulife, with insurance, wealth management, and asset management businesses primarily located in Canada, the United States, and Asia.

Underlying net income came in at $3.67 billion in 2022 compared to $3.53 billion the previous year. ROE remained above 15%. The board increased the quarterly dividend twice in 2022 for a total hike of $0.06 to $0.72 per share.

At the time of writing, investors can get a 4.4% yield on the stock.

Is one a better pick right now?

Insurance stocks are good alternatives to the banks for investors who are concerned that soaring interest rates could cause a crash in the housing market. In fact, rising interest rates tend to be positive for insurance companies, as they can get a better return on the cash they need to hold to cover potential claims.

Manulife offers a better yield than Sun Life right now. If you are focused on passive income, this might be the way to go as the first choice. Otherwise, Sun Life has delivered better share price growth in the past five years and should continue to raise the dividend, so it could be a good pick for investors targeting total returns.

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.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker has no position in any stock mentioned.

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