When most people think about financial stocks these days, their minds go straight to the Big Six banks. It’s no surprise, Canadian banks have long been seen as the stalwarts of the market, especially when investors are looking for dividends and stability. But there’s one name that keeps flying under the radar despite offering solid income, international growth, and smart innovation: Manulife Financial (TSX:MFC). While some investors might be wary of the insurance sector, I’d argue that Manulife is exactly the kind of contrarian bet that makes sense right now.
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The numbers
At first glance, Manulife’s Q1 2025 results might seem mixed. Core earnings came in at $1.8 billion, a slight 1% drop year over year. Net income fell more steeply, down 47% to $485 million. But dig deeper, and you’ll see that this is a case of optics overshadowing progress. Core earnings per share (EPS) actually rose 3% to $0.99, and book value per common share climbed 12% to $25.88, reflecting strong underlying fundamentals.
More importantly, the dividend stock reported record new insurance business results. Annualized premium equivalent (APE) sales surged 37%, new business CSM (contractual service margin) climbed 31%, and new business value jumped 36% compared to the same quarter last year. That’s not just growth, it’s impressive momentum, particularly in a global environment where many financial firms are scaling back.
More to come
Asia stood out as Manulife’s clear engine of growth, with a 43% increase in new business value and a 50% rise in APE sales. The dividend stock also extended its banc assurance deal with Chinabank in the Philippines for another 15 years, a move that locks in access to a fast-growing market.
Meanwhile, in the U.S., despite posting a loss due to wildfire-related provisions and increased credit loss expectations, the dividend stock still managed a 30% increase in new business value in that region. Core earnings from the U.S. were $251 million, even with the headwinds. Canada delivered solid if not spectacular results, with core earnings up 3% and new business value up 15%.
What really sets Manulife apart from the banks right now is its exposure to long-term trends. Life insurance, wealth management, and retirement planning are all on the rise globally, particularly in Asia. Manulife is doubling down on these opportunities through digital innovation and new product launches, including a hybrid indexed universal life insurance product in the U.S.
Considerations
The market hasn’t exactly rewarded Manulife for its performance yet. The dividend stock has largely treaded water in recent months. That’s precisely why it’s worth a look. Investors have priced in the decline in net income without acknowledging the clear signals of long-term growth and strength. For those willing to take the long view, this offers a rare opportunity to buy into a company with a modest 23.9% financial leverage ratio, and a strong buyback program in place. All signs of a company managing its capital prudently.
And let’s not forget the dividend. Manulife’s current yield sits comfortably above 4.2%, offering a steady stream of income while you wait for the market to catch up with the fundamentals.
Of course, there are risks. The U.S. long-term care insurance business remains a complicated legacy challenge. Market volatility could pressure global asset management flows, and net income volatility like we saw in Q1 won’t disappear overnight. But these are manageable risks for a company that’s clearly on the front foot when it comes to growth, innovation, and shareholder value.
Bottom line
So, if you’re looking to balance your financial sector exposure and move beyond the usual bank names, Manulife might be the contrarian bet that pays off. It has the global scale, diversified business model, and forward momentum to keep growing, even if the rest of Bay Street hasn’t quite caught on yet.
