Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and, of course, 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Sun Life (SLF) is headquartered in Toronto, and is in the Finance sector. The stock has seen a price change of 17.15% since the start of the year. The financial services company is currently shelling out a dividend of $0.68 per share, with a dividend yield of 3.69%. This compares to the Insurance - Life Insurance industry's yield of 0.5% and the S&P 500's yield of 1.41%.
Looking at dividend growth, the company's current annualized dividend of $2.70 is up 7.8% from last year. Over the last 5 years, Sun Life has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.94%. 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. Sun Life's current payout ratio is 49%, meaning it paid out 49% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for SLF for this fiscal year. The Zacks Consensus Estimate for 2026 is $5.70 per share, with earnings expected to increase 6.94% from the year ago period.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers its shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, SLF 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).
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Sun Life Financial Inc. (SLF): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).