Some stocks do their best work quietly. They don’t need a flashy headline or a wild rally to set up a strong year. Instead, they usually come with improving fundamentals, a reasonable valuation, and a business that keeps getting stronger while the market looks the other way. That can be especially true in financials, where better earnings, stronger capital, and steady dividend growth can take a while to show up in the share price.
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SFC
Sagicor Financial (TSX:SFC) fits that description nicely. It’s a life and health insurer with operations across the Caribbean, the United States, and Canada. That mix gives it more than one growth engine, which helps when one region slows. Over the last year, the company kept pushing its North American business forward while also announcing a plan to merge its two Caribbean operating segments into a single publicly listed entity called Sagicor Group Caribbean Limited. Management said that move should support a stronger digital transformation effort and sharpen execution.
The company also gave shareholders a nice signal in March when it raised its quarterly dividend by 11% to an annualized US$0.30 per share. That marked the third straight fourth-quarter report with a dividend increase. Quiet stocks that raise payouts again and again usually deserve a closer look, especially when the underlying business is also improving. Sagicor may not be a household name for many Canadian investors, but it acts like a company that thinks its best stretch may still be ahead.
Into earnings
The earnings story got much stronger in 2025. Sagicor reported core earnings to shareholders of US$142.3 million, up 57% year over year, while core basic earnings per share (EPS) rose 62% to US$1.05. Net income to shareholders came in at US$66.9 million, and total comprehensive income reached US$109.7 million. That’s a meaningful step up, especially for a stock that still feels overlooked. Shareholders’ equity reached US$1 billion, and book value per share landed at US$7.65.
Valuation is part of what makes the story interesting. Sagicor recently traded with a market cap near $1.3 billion. That puts it below its reported book value per share in Canadian dollars, which is already worth noting for an insurer. It offers a price-to-earnings (P/E) ratio of about 14.5. That’s not dirt cheap, but still looks modest for a company that just put up this kind of earnings growth and keeps nudging its dividend higher.
Looking ahead
The future outlook gives the bull case a little more shape. Management said its new guidance points to a targeted core return on shareholders’ equity of 14% in 2027 and 15% over the medium term. It also kept a targeted core dividend payout ratio of 30% to 40%. That suggests Sagicor is not just chasing one good year. It’s trying to build a steadier machine with room for both earnings growth and shareholder returns.
The stock is not expensive and the balance sheet looks solid, with a Group LICAT ratio of 136% and a financial leverage ratio of 26.9%. Plus, the business has geographic diversity, a growing U.S. operation, and a management team that seems comfortable rewarding patience. The risk, of course, is that insurers can still face earnings swings from claims, markets, or execution issues in new initiatives. But for investors willing to look past the noise, Sagicor looks like a name that may be quietly lining up a strong year.
Bottom line
If you are looking for one undervalued Canadian stock that could surprise people this year, Sagicor stock deserves a serious look. It has improving earnings, a rising dividend, a stock price below book value, and a growth plan that does not feel far-fetched. That’s often how strong years begin: not with a bang, but with a business getting better while the market is still only half paying attention.
