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Manulife Financial Corp's Dividend Analysis

Insights into Manulife Financial Corp's Upcoming Dividend Payment and Financial Health

Manulife Financial Corp (NYSE:MFC) recently announced a dividend of $0.40 per share, payable on March 19, 2024, with the ex-dividend date set for February 27, 2024. 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 look into Manulife Financial Corp's dividend performance and assess its sustainability.

What Does Manulife Financial Corp Do?

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Manulife Financial provides life insurance, annuities, and asset management products to individuals and group customers in Canada, the United States, and Asia. Its investment management business contributes approximately 20% of its earnings and has around CAD 1.35 trillion in assets under management and administration as of June 30, 2023. The U.S. business, which primarily operates under the John Hancock brand, contributes about 30% of earnings and is mainly focused on providing insurance products for estate, business, and income protection. The Asia segment provides insurance products and insurance-based wealth accumulation products in over 11 countries and contributes around 30% of earnings. The Canadian business segment contributes approximately 20% of earnings.

Manulife Financial Corp's Dividend Analysis
Manulife Financial Corp's Dividend Analysis

A Glimpse at Manulife Financial Corp's Dividend History

Manulife Financial Corp has maintained a consistent dividend payment record since 2000. Dividends are currently distributed on a quarterly basis. Manulife Financial Corp has increased its dividend each year since 2011. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 13 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.

Manulife Financial Corp's Dividend Analysis
Manulife Financial Corp's Dividend Analysis

Breaking Down Manulife Financial Corp's Dividend Yield and Growth

As of today, Manulife Financial Corp currently has a 12-month trailing dividend yield of 4.47% and a 12-month forward dividend yield of 4.85%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Manulife Financial Corp's annual dividend growth rate was 9.20%. Extended to a five-year horizon, this rate increased to 9.70% per year. And over the past decade, Manulife Financial Corp's annual dividends per share growth rate stands at an impressive 10.80%.

Based on Manulife Financial Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Manulife Financial Corp stock as of today is approximately 7.10%.

Manulife Financial Corp's Dividend Analysis
Manulife Financial Corp's Dividend Analysis

The Sustainability Question: Payout Ratio and Profitability

To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of December 31, 2023, Manulife Financial Corp's dividend payout ratio is 0.43.

Manulife Financial Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Manulife Financial Corp's profitability 5 out of 10 as of December 31, 2023, suggesting fair profitability. The company has reported net profit in 9 years out of the past 10 years.

Growth Metrics: The Future Outlook

To ensure the sustainability of dividends, a company must have robust growth metrics. Manulife Financial Corp's growth rank of 5 out of 10 suggests that the company has a fair growth outlook. Revenue is the lifeblood of any company, and Manulife Financial Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Manulife Financial Corp's revenue has decreased by approximately -16.60% per year on average, a rate that underperforms approximately 91.65% of global competitors.

The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Manulife Financial Corp's earnings decreased by approximately -1.70% per year on average, a rate that underperforms approximately 61.38% of global competitors.

Lastly, the company's 5-year EBITDA growth rate of 0.20%, which underperforms approximately 66.89% of global competitors.

Next Steps

In conclusion, while Manulife Financial Corp's dividend payments and growth rate have been commendable, its payout ratio and profitability indicate a cautious yet sustainable approach to dividend distribution. However, the growth metrics present a mixed outlook, with some areas showing underperformance compared to global competitors. Investors should weigh these factors, alongside the company's strategic initiatives and competitive position, when considering Manulife Financial Corp as a potential income-generating investment. Will the company's dividend continue to be a reliable source of income for shareholders? This is a key question for investors to ponder as they assess Manulife Financial Corp's financial health and future prospects.

GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.

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.