3 High-Income Insurance Stocks on Track to Boost Dividends
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In these days of 1% CDs, it's tough to find a yield worth getting excited about. That's why investors are always on the lookout for stocks that deliver great dividend yields and can stay on course.
Here, we've unearthed three insurance stocks that offer fat dividend yields that are likely to rise even higher in coming quarters.
Let's take a look at our three cash-rich insurance giants.
1. Sun Life Financial (SLF) - Get Report
Sun Life Financial has a sound strategy in place to ensure accelerated growth, higher returns on shareholders' equity and market share improvements, across its key markets of Canada, the U.S. and Asia.
The Toronto-based company reported third-quarter results on Nov. 4. Operating net income was $366 million (C$478 million), up 2.3% year over year. Its quarterly dividend per share increased to 39 Canadian cents, or 30 cents, following another increase earlier this year. The dividend is in line with the company's target payout range of 40%-50%.
The average estimate from analysts is for the company's earnings per share to increase to $3.84 in 2016, up from an estimated $3.57 for all of 2015, according to Yahoo Finance. That would be 7.5% year-over-year growth. On average, analysts expect the company to grow its earnings 12.7% a year over the next five years, vs. 9.3% for the industry, according to Yahoo Finance.
Sun Life is just one of several select income-friendly stocks with strong balance sheets that can sustain high yields into the foreseeable future.
2. Manulife Financial (MFC) - Get Report
Manulife is taking advantage of growth opportunities in insurance and asset management businesses across several Asian markets. Roy Gori, the chief of Manulife Asia, recently mentioned that the company is looking at leveraging its own capital position and favorable demographic trends in the region.
Manulife has a trailing-12-month price-to-earnings ratio of 17.4, compared with an industry average of 22.77. Its return on equity, which is at 7.6%, however, is below the industry average of 9.9%. Its debt-to-equity ratio for the most recent quarter is at 21.11, better than the industry average of 32.92. On average, analysts expect annual revenue in 2016 to grow to $46.9 billion from an estimated $43.4 billion in 2015, according to Yahoo Finance. Earnings per share are expected to grow 15% in 2016, also according to Yahoo Finance.
This stock's dividend yield is 3.1% and compares favorably with the industry average of 1.5%.
3. Prudential Financial (PRU) - Get Report
Prudential Financial reported third-quarter results earlier this month. In the company's earnings release, the CEO said Prudential delivered 12% constant-currency sales growth in its international businesses, and "strong" sales growth in its U.S. protection businesses.
The company's asset management operations generated more than $3 billion of third-party net flows, while the retirements business saw over $2 billion in net flows, the CEO also said.
Prudential recently approved a 21% increase in its quarterly dividend to 70 cents per share. Its dividend yield of 2.69% is superior to the industry yield of 1.5%.
Since the beginning of 2010, Prudential Financial has returned nearly $9 billion to shareholders in the form of dividends and buybacks.
On average, analysts expect the company to grow earnings 9.02% a year over the next five years, which is roughly in line with the 9.3% annual growth expected for the industry, according to Yahoo Finance.
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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.