Manulife Financial (TSX:MFC) is going more global, a lot sooner than predicted.
MFC stock saw shares jump 7% after earnings came out, reporting that the company saw incredibly strong performance in Asia. What’s more, it’s now extending its goals in Asia by another two years.
What happened?
It was an overall strong quarter for MFC stock. Canada’s largest insurer beat analyst estimates for core earnings, with strong performance both in Canada and Asia leading the charge. The company saw its Asia business in particular rise as mainland Chinese visitors have been heading to Hong Kong after pandemic restrictions were lifted.
There were some strong results in profitability, with a 11% rise in annual premium equivalent (APE) in Asia, and 44% in Canada. But the growth doesn’t look to be done yet, with MFC stock stating it’s also rejigging its portfolio to focus on more profitable areas. This included a $10 billion reinsurance deal last year.
For the quarter, the stock reported core earnings of $1.77 billion or $0.92 per share, compared to $1.54 billion and $0.77 the year before. Furthermore, MFC stock announced it would be increasing its dividend by 9.6%!
More to come
Not only is MFC stock happy with the growth in Asia, it wants more of it. In fact, the company set out an earnings target of accounting for half of core earnings by 2025. In that two years, it would mean increasing from 23% in 2023.
It’s an extension that came along after Asia, and China in particular, continued to see pandemic restrictions weigh on the country. Now, with restrictions finally lifted, it looks as though that goal could finally be reached.
MFC stock currently operates in 13 markets in Asia, and about 13 million customers. And as mentioned, with more visitors to Hong Kong, there has been a resurgence of even more opportunities. And while this is all exciting, there is, of course, one area where investors were likely quite focused.
More dividends!
The big heavy hitter isn’t just more growth in Asia — there’s also more dividends! Manulife stock announced a rise of 9.6% as mentioned. With growth to come and dividends on deck, it’s clear why investors flooded the stock after earnings.
Shares jumped by about 7% on Thursday after earnings were reported. This added to the company’s already strong track record, with shares up 13% in the last year. And yet, MFC stock remains a steal on the TSX today.
Investors can pick up the stock trading at just 4.38 times earnings, and 1.97 times sales. So, despite all this growth, there is still more than enough reason to pick up the stock. And with more travel coming down the line for China and other Asian countries, it’s likely that the growth in shares and dividends is here to stay.
Bottom line
Canadian insurers have had a hard time finding ways to grow besides offering more insurance options. Yet MFC stock has been a leader in finding those opportunities in emerging markets and beyond. Asia has been one of these success stories, and there could be even more on the way as the company seeks out growth opportunities.
So, is MFC stock a buy on earnings? Absolutely — especially for long-term shareholders looking for more dividends.
