Some people prefer investing in growth stocks that could deliver impressive capital gains over time, while others feel more comfortable owning dividend stocks that provide regular cash payouts. Personally, I love to own businesses that can reward me with regular dividend payments while also growing their earnings and share prices over time. To me, that’s one of the most attractive combinations in long-term Foolish Investing. You don’t have to choose between earning passive income today and building wealth for the future if you can find a financially strong business capable of doing both.
In this article, I’ll highlight one Canadian financial stock that could offer such an attractive combination of growing passive income and long-term wealth creation.
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The ideal Canadian stock for growth and dividends
Manulife Financial (TSX: MFC) is the Canadian stock I like for long-term investing because its dividend puts cash in shareholders’ pockets while the business continues finding new ways to grow. In short, this Toronto-headquartered financial services giant provides insurance, wealth management, and retirement solutions across Canada, Asia, and the United States.
After rallying 34% over the last year, MFC stock currently trades at $62.85 per share with a market cap of $104.3 billion. Despite these gains, it still offers an attractive 3.1% dividend yield, paid on a quarterly basis. Interestingly, Manulife shares have surged by 144% over the last three years, highlighting the stock’s impressive growth momentum.
What enhances Manulife’s investment appeal
Manulife’s investment appeal goes beyond its recent stock gains. Improving underlying earnings and efforts to expand its business could help drive further growth.
In the third quarter, Manulife delivered record core earnings of $2.1 billion, up 4% year-over-year (YoY) on a constant exchange rate basis. This growth was mainly driven by strong business growth in Asia and the United States, along with improved insurance-related performance.
Manulife’s Asian operations were particularly impressive, with core earnings jumping 17% YoY with the help of continued business expansion, better claims experience, and favourable updates to actuarial assumptions. Meanwhile, the company’s Canadian and U.S. businesses also contributed positively, posting core earnings growth of 3% and 5%, respectively.
Why Manulife could be a rewarding long-term investment
Besides its improving earnings, Manulife’s ongoing expansion and strategic investments give investors more reasons to consider this fundamentally solid Canadian dividend stock.
For example, the financial services giant continues to strengthen its wealth management business to capture new growth opportunities. During the latest quarter, its Manulife | Comvest business raised US$5.4 billion through its largest private credit fundraise to date. This could help Manulife expand its presence in alternative investments and strengthen relationships with institutional investors.
At the same time, the company is investing in artificial intelligence (AI) to improve operational efficiency and customer experience. It recently expanded its partnership with Microsoft through a new five-year agreement to introduce AI-powered tools across its operations. These investments should improve Manulife’s productivity and support long-term earnings growth.
Foolish takeaway
In the third quarter alone, Manulife returned $1.3 billion to shareholders while maintaining a strong financial position, showcasing its commitment to returning capital to shareholders.
Given its solid earnings growth, expanding international business, and continued focus on shareholder returns, I believe Manulife could be an excellent Canadian stock to buy now and hold for years to benefit from both capital appreciation and dividend income.
