Sun Life Financial Inc's Dividend Analysis
An In-Depth Look at the Upcoming Dividend and Company Fundamentals
Sun Life Financial Inc (NYSE:SLF) recently announced a dividend of $0.78 per share, payable on 2024-03-28, with the ex-dividend date set for 2024-02-27. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's delve into Sun Life Financial Inc's dividend performance and assess its sustainability.
What Does Sun Life Financial Inc Do?
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Sun Life Financial Inc provides life insurance, retirement, and asset management products to individuals and corporate customers in Canada, the United States, and Asia. The company's investment management business contributes approximately 38% of its adjusted earnings and has around CAD 1 trillion in assets under management as of the second quarter of 2023. The Canada business contributes about 32% of adjusted earnings and provides individual life and health insurance, group insurance, retirement services, and wealth management solutions. The U.S. business contributes approximately 14% of earnings and is mainly focused on providing group insurance products and managing the in-force life insurance policies. Finally, the Asia segment contributes around 16% of earnings.
A Glimpse at Sun Life Financial Inc's Dividend History
Sun Life Financial Inc has maintained a consistent dividend payment record since 2000, distributing dividends on a quarterly basis. The company has increased its dividend each year since then, earning it the title of a dividend achiever, a distinction reserved for companies with at least 24 consecutive years of dividend increases.
Below is a chart showing annual Dividends Per Share for tracking historical trends. (Please note that the image for the dividend per share history is missing and should be included here.)
Breaking Down Sun Life Financial Inc's Dividend Yield and Growth
As of today, Sun Life Financial Inc currently has a 12-month trailing dividend yield of 4.07% and a 12-month forward dividend yield of 4.20%, indicating an expectation of increased dividend payments over the next 12 months. Over the past three years, Sun Life Financial Inc's annual dividend growth rate was 10.90%, which decreased to 9.40% per year over a five-year horizon. Over the past decade, the annual dividends per share growth rate stands at 7.90%.
Based on Sun Life Financial Inc's dividend yield and five-year growth rate, the 5-year yield on cost for Sun Life Financial Inc stock as of today is approximately 6.38%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. Sun Life Financial Inc's dividend payout ratio as of December 31, 2023, is 0.47, offering a comfortable margin for the company to sustain its dividends while retaining earnings for growth and downturns. Sun Life Financial Inc's profitability rank of 5 out of 10, as per GuruFocus as of the same date, suggests fair profitability. The company has also reported positive net income each year over the past decade, reinforcing its financial stability.
Growth Metrics: The Future Outlook
For dividends to be sustainable, a company must demonstrate strong growth metrics. Sun Life Financial Inc's growth rank of 5 out of 10 points to a fair growth outlook. However, the company's revenue has decreased by approximately 9.00% per year on average, underperforming about 86.81% of global competitors. Its 3-year EPS growth rate of 5.00% per year also underperforms about 48.41% of global competitors. Lastly, Sun Life Financial Inc's 5-year EBITDA growth rate of 5.20% underperforms about 51.19% of global competitors.
Concluding Thoughts on Sun Life Financial Inc's Dividend Prospects
In conclusion, while Sun Life Financial Inc's dividend payments and growth rates appear promising, the payout ratio, profitability, and growth metrics present a mixed picture. The company's consistent dividend increases and reasonable payout ratio suggest a commitment to returning value to shareholders. However, its growth metrics indicate potential challenges ahead. Investors should consider these factors when evaluating the sustainability of Sun Life Financial Inc's dividends. For those seeking to explore further, GuruFocus Premium offers tools like the High Dividend Yield Screener to discover high-dividend yield stocks.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
