Where Will Sun Life Financial Be in 5 Years?

Sun Life Financial (TSX:SLF) stock has been heating up of late, and it’s still quite cheap!

The Canadian financial scene still has plenty of value for investors seeking upside and a decent, growing dividend. Undoubtedly, the big banks have been getting a lot of attention so far this year, with the cohort making up for lost time after a sluggish few years of volatility.

And while the big banks (the so-called Big Six) still look like great buys with their stellar yields, steady dividend growth trajectories, and now-heated momentum, I wouldn’t ignore the value plays to be had in the insurance scene. Indeed, Canadian insurers have been in a bull market of their own lately, and there may be deep value to be had for value investors willing to buy and hold for at least the next three to five years.

Of course, Canada’s economy faces challenges, and the life insurance juggernauts could encounter a new set of hurdles going into 2026. However, I’d be more than willing to give them the benefit of the doubt, given how well they’ve been managed through the last five years of macroeconomic turbulence. In short, the top life insurers were built to last, and going into the second half, I think they may have more outperformance up their sleeves.

chart reflected in eyeglass lenses

Source: Getty Images

Sun Life stock is picking up the pace!

Sun Life Financial (TSX: SLF) stock is a standout performer after recently melting up close to 37% since August 2024. Now up close to 85% in the last five years, I think long-term investors should give the life insurer a closer look, even as shares hover at fresh all-time highs north of the $89 mark. Even at all-time highs, the stock looks quite modestly priced at 16.26 times trailing price to earnings (P/E). The dividend yield is still at a nice 3.94%. And while it’s not the highest it’s been, I think that the magnitude of dividend growth could become more generous moving forward, especially if the firm continues beating handsomely on quarterly earnings.

With management comforting investors amid Trump tariff tremors, noting that such tariffs appear manageable, I think it’s time to consider building a partial position going into July. As the threat of Donald Trump’s tariffs lingers in the second half of 2025, Sun Life’s impressive management team appears ready to batten down the hatches.

In essence, the company’s CEO, Kevin Strain, says his firm does not wish to “overreact to the negative,” but is looking to “prepare for the worst.” Indeed, whenever a firm has a backup plan for a bear-case scenario of sorts, investors may be in for dampened downside. Of course, the 0.88 beta, which entails only a hair less volatility than the broader TSX Index, makes shares of SLF have a good amount of correlation to the broad market.

Time to buy the underrated financial?

Either way, those who can handle the volatility may wish to ride behind Sun Life on strength. With a few solid quarters behind it and rising profits across its top geographies (Canada, the U.S., and Asia), I believe recent strength could lead to further growth. All considered, SLF stock is a great buy for dividend growth investors looking for the best of both worlds (dividends plus appreciation potential). Where will Sun Life be in five years? It will probably quite a bit higher as the firm continues gaining in its top markets of interest.

Fool contributor Joey Frenette 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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