Manulife Financial (MFC) Could Be a Great Choice

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Manulife Financial in Focus

Headquartered in Toronto, Manulife Financial (MFC) is a Finance stock that has seen a price change of 4.01% so far this year. The financial services company is currently shelling out a dividend of $0.61 per share, with a dividend yield of 3.99%. This compares to the Insurance - Life Insurance industry's yield of 1.75% and the S&P 500's yield of 1.56%.

Looking at dividend growth, the company's current annualized dividend of $1.28 is up 8% from last year. Over the last 5 years, Manulife Financial has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.83%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Manulife's payout ratio is 43%, which means it paid out 43% of its trailing 12-month EPS as dividend.

MFC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $2.94 per share, with earnings expected to increase 4.26% from the year ago period.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, MFC is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."

Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Source Zacks-com