SUN LIFE FINANCIAL $42.21 (Toronto symbol SLF; Shares outstanding: 612.7 million; Market cap: $25.0 billion; TSINetwork Rating: Above Average; Dividend yield: 3.8%; www.sunlife.ca) sells life insurance, savings, retirement and pension products to individuals and corporations. The company has $861.5 billion of assets under management and mainly operates in Canada, the U.S. and the U.K. It’s also expanding in Asia.
In the three months ended March 31, 2016, Sun Life’s earnings per share rose 13.1%, to $0.95 from $0.84.
The company continues to diversify in the U.S. At the same time, it is focused on highly profitable niche markets with low capital requirements.
Its latest move was last year’s purchase of the U.S. employee benefits unit of Assurant Inc. for $975 million U.S. It nearly doubles the size of Sun Life’s U.S. benefit business, to $4.0 billion worth of policies for over 64,000 employees of small, medium and large businesses. The company is now the sixth-largest U.S. benefits provider by revenue, up from ninth.
The acquisition also adds leading dental and vision insurance products to Sun Life’s lineup, letting it cross-sell them to its existing clients. As well, Assurant has invested heavily in an advanced online enrollment and customer-service system. Sun Life can extend this system to its entire benefits business.
The stock trades at just 11.3 times the company’s forecast 2016 earnings of $3.74 a share. Sun Life raised its quarterly dividend by 3.8% with the June 2016 payment, to $0.405 from $0.39. The stock yields a high 3.8%.
Sun Life is a buy.
