If you’re like me, you may have seen those Guaranteed Investment Certificates (GICs) yielding 5% and started to drool. In fact, just about a year ago I put a bunch of cash into these GICs, and now, I’m reading to take them out after a year of growth.
I’ll be putting some cash right back into GICs. Interest rates remain high, and it’s best to take advantage of it while I can! However, let’s say you’re going to take out some of that cash for investment. Here is what I would consider with $10,000 on the TSX today.
Get into growing dividends
If you’re going to create even more cash, you want fixed income. And that can come from dividend stocks, but only the right ones. And that’s why you’ll want to look at companies that have been consistently growing their dividends and should continue to do so.
One area where this has happened is with life insurance companies. Higher interest rates have been good for these companies as well, which have raised rates along with the rest of the world. And that has led to record profits in the case of many of these companies.
In fact, the life insurance companies should continue to deliver solid earnings-per-share growth over the next quarter and beyond, though one certainly stands out.
Manulife stock
It seems as though life insurance stocks will continue to beat out earnings from banks for the third year in a row. And Manulife Financial (TSX:MFC) should beat out the batch. The stock currently has an outperform rating, with shares given a potential price target of $30.51 by analysts.
For years, shares hovered around the $21 mark. However, with long-term yields and the sale of its long-term-care facilities, there is now true value placed in Manulife stock. That comes even as the stock has risen higher and higher over the last few months.
Yet, even after recent moves, there is more to look forward to for investors. This would include stronger performance in Asian markets, especially with ongoing issues in China and Taiwan. Overall, there may be some short-term issues that are far outweighed by long-term strong results, especially given the valuation at hand.
Bottom line
So, let’s say you get into Manulife stock on the TSX today. Shares currently trade at $30 per share and offer a 4.94% dividend yield as of writing. It also offers value trading at 4.22 times earnings on the TSX today and 1.91 times sales.
Shares increased by 14% in the last year and could easily do this once again in the next year as well. So, let’s say you put that $10,000 into Manulife stock. Here is what you could achieve in both returns and dividends in the coming year.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | PORTFOLIO TOTAL |
| MFC – now | $30 | 333 | $1.46 | $486.18 | quarterly | $10,000 |
| MFC – highs | $34.20 | 333 | $1.46 | $486.18 | quarterly | $11,388.60 |
There you have it. You could earn $486.18 in dividends as well as $1,388.60 in returns. That’s a total of $1,874.78 in passive income! This is something investors should consider on the TSX today.
