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What are we looking for?

The sustainable dividends of Canadian insurers now profiting from overseas markets in addition to their domestic ones.

The screen

Sun Life Financial Inc. reported strong third-quarter results this week – and the stock soared to a new all-time high. It’s not alone, with other top Canadian insurers also hitting new highs.

Sun Life continues to benefit not just from its successful Canadian and U.S. operations, but also its exposure to Asian markets. Other insurers are profiting from overseas customers as well – and not just Asia, but Europe and elsewhere.

International operations offer investors not just added growth prospects, but valuable regional and currency diversification.

From a list of Canadian life insurers, we identified leaders with steady growth prospects plus the added appeal of international diversification. We then applied our TSI Dividend Sustainability Rating System. It awards points to a stock based on key factors:

  • One point for five years of continuous dividend payments – two points for more than five;
  • Two points if it has raised the payment in the past five years;
  • One point for management’s commitment to dividends;
  • One point for operating in non-cyclical industries;
  • One point for limited exposure to foreign currency rates and freedom from political interference;
  • Two points for a strong balance sheet, including manageable debt and adequate cash;
  • Two points for a long-term record of positive earnings and cash flow to cover dividends;
  • One point if the company is an industry leader.

Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above-average sustainability; average sustainability, four to six points; and below average sustainability, one to three points.

What we found

International diversified insurers with reliable dividends

Ranking*CompanyTickerDiv. Sustain. RatingPointsDiv. Yld. (%)Mkt. Cap. ($ Mil.)1Y Ttl. Rtn. (%) Recent Price ($)
1Great-West Lifeco Inc.GWO-TAbove Average94.743,997.118.447.55
2Sun Life Financial Inc.SLF-TAbove Average94.146,085.225.682.08
3Manulife Financial Corp.MFC-TAbove Average93.772,978.071.643.57
4Fairfax Financial Holdings Ltd. FFH-TAbove Average91.141,538.044.51,810.43
5Power Corp. of CanadaPOW-TAbove Average84.929,023.332.846.15

Source: Dividend Advisor.

* Ranking is determined by TSI Dividend Sustainability Score. Where overall points are the same, analysts considered P/E, dividend yield and industry outlook to decide final placements.

Our TSI Dividend Sustainability Rating System generated five stocks. Sun Life Financial Inc. SLF-T and Manulife Financial Corp. MFC-T, both headquartered in Toronto, are among Canada’s leading life insurers, with expanding interests in Asia. Another Toronto-based leader, Fairfax Financial Holdings Ltd. FFH-T, mainly sells insurance and reinsurance – both in Canada and around the world. It also manages a large investment portfolio that includes holdings in India and Greece. Winnipeg-headquartered Great-West Lifeco Inc. GWO-T is top life insurer in Canada and the U.S., but also in Europe. Montreal-headquartered holding company Power Corp. of Canada POW-T has controlling stakes in Great-West Lifeco as well as IGM Financial Inc. The latter is Canada’s largest independent mutual fund provider and further builds on Power’s regional and operational diversity.

Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 14/11/24 0:53pm EST.

SymbolName% changeLast
GWO-T
Great-West Lifeco Inc
+0.77%48.68
SLF-T
Sun Life Financial Inc
+1.52%85.71
MFC-T
Manulife Fin
+1.61%46.15
FFH-T
Fairfax Financial Holdings Ltd
+1.46%1925
POW-T
Power Corp of Canada Sv
+1.16%45.54

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