Established global insurance companies are safe investments for their resiliency and healthy long-term growth rates. If you want exposure to the industry right now, two iconic Canadian brands should be on your buy list.
Manulife Financial (TSX: MFC) and Sun Life Financial (TSX: SLF) rewarded investors with double-digit returns in 2024 on top of decent dividend income. Both companies have positive momentum and are well-positioned for an industry transformation this year, especially digital innovation.
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Raising the bar
During Manulife’s investor’s day in June 2024, held in Hong Kong, its president and chief executive officer (CEO), Roy Gori, said the $74.44 billion company is raising the bar with bold, achievable targets for the next phase of the journey. He added there is tremendous opportunity ahead and excitement to outperform the market and capture that opportunity. In 2024, MLF gifted investors with a 42.1% overall return. If you invest today ($43.06 per share), the dividend yield is 3.72%.
Because of its significant global scale and digital capabilities, Gori believes that Manulife can provide solutions more cost-effectively while generating superior returns. He expects business growth to come from the Asian market due to the growing middle-class population.
In the nine months ended September 30, 2024, net income increased 8% to $3.75 billion from a year ago. The net income in Asia climbed 136% year over year to US$1.3 billion. Still, management said that Manulife is not limited to fixed-income investments but has a distinctive positioning because of a diversified, high-quality asset mix. The latter is why the stock delivers superior long-term risk-adjusted returns.
Winning strategy
Sun Life, one of the oldest insurance providers in Canada, believes it has a winning strategy and superior business mix. The primary goal of this $48.54 billion company is to be the best asset management and insurance company in the world. The current share price is $84.58, while the dividend offer is 3.97%. Its overall return in 2024 was +17.1%.
On February 3, 2025, Bank of Nova Scotia maintained an “outperform” rating and raised its price target for SLF from $96 to $98 (+15.9% upside). Scotiabank analysts see Sun Life as a safe haven should the U.S.-Canada tariff war escalate.
According to management, the balanced, diversified, capital-light, and high-growth business model is a competitive advantage. Sun Life also derives synergistic benefits between insurance and asset management. Its path to win is to scale with digital by embedding it throughout the organization.
Sun Life will likely present strong earnings growth for 2024 due to new insurance sales in Canada and Asia. In the first three quarters of the year, net income rose 20.3% year over year to $2.81 billion. Its president and CEO, Kevin Strain, said the business continues to produce capital and cash, evidenced by the recent 3% dividend increase and share buybacks.
High-quality stocks
Manulife and Sun Life are both large-cap stocks and dividend growers. However, the former should have the edge and a better choice in 2025. MFC has unstoppable momentum from a year ago (+49.97% vs. +25.2% trailing one-year price return) and record levels of new business growth.
