Look To Insurers Instead of Banks For Quality Dividends!

With my recent focus on the fundamentals of personal finance, many readers have emailed me and asked why I’ve been avoiding talk about dividend stocks and the markets in general.

Well, it’s not necessarily that I have been avoiding it because I believe that our portfolios deserve as much attention now as they do when the bulls are raging!  The fact of th ematter is that the media sensationalizes everything.  Granted, it is their job to sell magazines, newspapers and subscriptions and to deliver the “news” to the public.  However, there is no happy medium with traditional market coverage.

Have you ever noticed that the headlines either yell “Sell…sell..sell” or “Buy…buy…buy”!  It’s true that a magazine with the headline “Now Is The Best Time To Do Nothing With Your Stocks” would not sell very well, but that is exactly what is needed.

I’m not avoiding coverage of  dividend stocks

In fact, I’m doing quite the opposite.  Now is a great time to comb over some high quality companies whose dividend yields are above their respective historic averages and pluck some of the good fruit that has been battered down with the market.

Have you heard of the saying “A High Tide Lifts All Ships”?  That means that even the poor companies benefit from a rising market.  Well, the opposite is also true in markets like we are experiencing now.  Some great companies are being beaten down simply because the overall market is taking a hit.

What to Look For

While I love Canadian bank stocks, it may be a prudent time to steer clear of banks until the dust settles a little more.  However, just like Canadian bank stocks,  the major Canadian insurers are high quality companies that are more likely to perform at this time in my humble opinion.

I still believe in the Canadian banks as great dividend plays for the long haul due to their strong capitalization, but insurance companies seem to be offering great value in the near term – maybe 12-18 months.

While their core business is insurance, they compete against the banks in savings and investment products, and enjoy superior credit ratings. While I don’t agree with the products themselves, the capital guarantees insurance companies provide with investment funds and annuities tend to rise in popularity when stock markets are volatile.

Some names to research for adding a Canadian insurer to your dividend portfolio are:

Great West Life (GWO.TO)
Price = $28.43
Yield = 4.12%
Beta = 0.57
P/E = 13.95
ROE = 18.69
5 Year Div. Groth Rate = 17.54

Sun Life Financial (SLF)
Price = $44.23
Yield = 3.23%
Beta = 1.16
P/E = 11.63
ROE = 14.02
5 Year Div. Growth Rate = 30.36

Manulife Financial (MFC)
Price = $34.63
Yield = 2.75%
Beta = 0.99
P/E = 16.83
ROE = 13.87
5 Year Div. Growth Rate = 23.73

There you have it!  A great place to start with research to add a high quality insurer to your dividend portfolio.  All three of these companies are near their 52 week low and offer higher than average yields historically speaking.

(Disclosure: Dividend Money owns shares in SLF) 


  1. Nice picks!Im buying most of the high paying bank dividend stocks listed on my blog.Im going slow and small with my stock buying.

  2. Nice picks. I myself am picking up CINF- cincinati financial, which is also an insurer. I like the fact that insurers have “float” which could be invested and earn money for the companies owning it.

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