Beat the TSX With This Cash-Gushing Dividend Stock

This dividend stock has been absolutely crushing the TSX 60 and looks like it will continue to do so while providing a juicy dividend.

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When you consider TSX-beating dividend stocks, there is a factor I like to introduce. Instead of looking at the TSX as a whole, we’ll look at the top 60 TSX stocks instead. In this case, beating the TSX becomes a lot harder.

But it’s not impossible.

What it would take

First off, let’s look at what it would take to beat the TSX 60 right now. The TSX 60 tracks the performance of the 60 largest companies listed on the Toronto Stock Exchange. This represents the large-cap segment of the Canadian equity market and is a good indicator of the overall health of the Canadian stock market as well.

Since the TSX 60 is weighted by market cap, this can change and rebalance quarterly to make sure it continues to reflect the largest and most liquid companies on the TSX today. Right now, the TSX 60 trades at about $1,330 as of writing. This has provided a total return of 12.83% in the last year.

With this in mind, it means that you’re going to want a company that has beaten the TSX 60, rising higher than that 12.8% in the last year. And in that case, there’s one dividend stock doing just that.

Manulife

When it comes to strong performance in the last year, there are few companies that can compare with the insurance industry. And among those, Manulife Financial (TSX:MFC) has perhaps been doing the best.

Manulife stock is up a whopping 36% in the last year. And yet, it still offers a lot of value for Canadian investors right now — especially for those seeking out a dividend stock for its strength and performance. Manulife stock currently offers a 4.79% dividend yield while trading at 12.93 times earnings.

Furthermore, its price-to-sales and price-to-book ratios remain cheap, trading at 1.45 and 1.49, respectively. It holds a steady dividend-payout ratio at 56% as of writing, with a healthy 20% profit margin. Overall, it looks like a strong dividend stock with huge gains.

Why it’s doing so well

Manulife stock is one of the largest life insurance companies in the world. It offers a diverse range of financial products and services, including life insurance, health insurance, retirement planning, wealth management, and investment management. It operates around the world, expanding in emerging markets as well.

The company is known for its financial stability and strength, coming from its ability to expand even during market downturns. Yet that looks to improve even more in the future. Manulife stock expects its Asia arm to contribute half of core earnings by 2025, up from 23% in 2023.

What’s more, companies like Manulife stock benefit from these high interest rate environments. A large portion of insurance company assets are invested in bonds, so when interest rates rise, potential returns rise as well. Furthermore, higher interest rates and inflation usually mean companies charge more for insurance, bringing in even more cash.

Bottom line

Manulife stock is an all around cash-gushing machine of a dividend stock. It’s continued to do well during this period and doesn’t look to be slowing down. So, with a large dividend to consider, more profit on the way, and an expanding business, consider this dividend stock for your 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.

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