Manulife Financial (TSX: MFC) has been an incredibly steady performer over the past year, gaining just shy of 24% year-to-date, even after a brutal 4% single-day plunge on Thursday’s treacherous session of trading. Indeed, it’s been selling across the board of late, but before investors hit the panic button on everything, I do think a name like Manulife could be a worthy pick-up on a pullback, especially for those who missed the past-year rally and were just waiting for another window of opportunity to open up.
Of course, shares of MFC are only down 4%, far less than the S&P 500 and certainly the Nasdaq 100, which are both in a world of pain this week. With the company recently pulling the curtain on its own third-quarter (Q3) results, investors seem quite unenthused despite the solid earnings beat and strength out of Asia.
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Manulife stock could be a major bargain after earnings and a broader market sell-off
With the pain extending to the next day (I think it’s more to do with the unsettled market than anything to do with Manulife specifically), I think investors stand to get a fantastic dividend payer (and grower) that’s still very much on the right track. The longer-term fundamentals are still in good standing, even though the Q3 results were far from perfect. As the firm continues to make the most of its Asian expansion, I’m inclined to believe that the growth to come will be well worth the restructuring costs invested to better position the firm.
While there are certainly richer dividend yields to be had in the Canadian life insurance space nowadays, especially after earnings, I do think that Manulife stands out as a deeper-value option for investors hungry for deals. Indeed, the stock market has been under considerable pressure, with high-volatility tech plays in the blast zone. As investors begin to scoop up the bargains, I do think Manulife stock stands out as a name that could stand tall if such a growth-to-value rotation were to come into full swing.
At the time of this writing, shares of MFC go for 16.7 times trailing price-to-earnings (P/E) alongside a 3% dividend yield. Is this the cheapest Manulife stock has traded? Most definitely not. And the yield isn’t close to a high watermark either. Given the impressive past few quarters, though, it should come as no surprise as to why the name is just a good day or two away from making a return to its prior highs, even in a U.S. market that’s more than halfway into a correction.
A strong 3%-yielder with upside potential
For retirees seeking a steady performer with a 3% yield to consider at this pitstop, I do think MFC stock post-earnings stands out as a great relative value stock that could hold up as we discover just how low the tech and AI trade can go this November. For the most part, the Q3 results were decent, but the market mood is in a low spot.
I think that when the market looks through the wreckage of Thursday’s sell-off, MFC could be one of the names that’s bought up as investors take a rain check on tech and AI. Speaking of AI, Manulife’s underwriting and customer service could get a shot in the arm as the technology continues to advance. There’s real enterprise value to be had here, and that’s why I’d rather be in the name than in something “closer” to the AI trade.
