The life insurance business has seen enormous sales growth in recent years owing to increasing consumer awareness related to the welfare and well-being of their families. Furthermore, the yield on the benchmark 10-year Treasury note rose eight basis points to 2.942% this week, its highest yield since 2018. Also, interest rates are expected to increase significantly later this year. This bodes well for life insurers because higher interest rates allow them to generate better returns on their long-term investments that are structured to meet their commitment to policyholders.
Investments in technology to serve today’s tech-savvy consumers and simplify underwriting practices should also drive the life insurance industry’s growth.
Given this backdrop, we think dividend-paying life insurance stocks MetLife, Inc. (MET) and Manulife Financial Corporation (MFC) could be a great addition to your portfolio.
MetLife, Inc. (MET)
MET is a financial services company that provides insurance, annuities, employee benefits, and asset management services worldwide. The New York City based company has five operational segments: U.S.; Asia; Latin America; Europe, the Middle East, Africa; and MetLife Holdings. The company offers life, dental, group short-and long-term disability, individual disability, pet insurance, accidental death and dismemberment, vision, and accident and health coverages.
MET paid an annual dividend of $0.48 on March 14, 2022. Its $1.92 annual dividend yields 2.7% at its current share price. It has a four-year average dividend yield of 3.7%. In addition, the company's dividend payouts have increased at a 6.1% CAGR over the past five years.
Last month, MET announced the launch of its new Structured Installment Sale solution, which is available through its subsidiary, Metropolitan Tower Life Insurance Company. The solution is available in 49 states, Puerto Rico and Washington, D.C. Structured Installment Sales allows individuals to defer their tax liability for eligible property sales, including small businesses and agricultural, residential, and commercial properties.
During the fourth quarter, ending Dec. 31, 2021, MET's total revenue increased 3.5% year-over-year to $20.09 billion. Its adjusted earnings amounted to $1.70 billion, while its adjusted EPS increased 6.9% from its year-ago value to $2.17.
The $8.09 consensus EPS estimate for its fiscal 2023 represents a 12% improvement year-over-year. Analysts expect its revenue to increase 0.6% year-over-year to $16.81 billion for the first quarter, ending March 31, 2022. Also, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock gained 14.6% in price year-to-date and 21.3% over the past nine months.
MET's POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock also has a B grade for Growth, Sentiment, and Momentum. Within the B-rated Insurance – Life industry, it is ranked #2 of 28 stocks.
To see additional POWR Ratings for Stability, Value, and Quality for MET, click here.
Manulife Financial Corporation (MFC)
Along with its subsidiaries, MFC in Toronto, Canada, offers financial products and services in Asia, Canada, the United States, and internationally. The company operates through Wealth and Asset Management Businesses; Insurance and Annuity Products; And Corporate and Other segments.
MFC paid an annual dividend of $0.26 on March 21, 2022. Its $1.04 annual dividend yields 4.9% at its current share price. It has a four-year average dividend yield of 4.5%. In addition, the company's dividend payouts have increased at a 10.9% CAGR over the past five years.
During the fourth quarter of 2021, MFC's APE sales increased 5% year-over-year to $1.4 billion. The company's core earnings amounted to $1.7 billion, up 20% on a constant exchange rate basis from its prior-year quarter. The company's core earnings per share increased 13.5% year-over-year to $0.84.
Analysts expect MFC's revenue to increase 19.9% year-over-year to $58.50 billion for its fiscal year 2022. The $0.67 consensus EPS estimate represents a 0.2% improvement year-over-year for the first quarter, ending March 31, 2022. it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
The company's shares have surged 11.4% in price year-to-date and 10.1% over the past nine months.
MFC's strong fundamentals are reflected in its POWR Ratings. MFC has also rated an A grade for Growth and a B for Momentum. Within the Insurance – Life industry, it is ranked #6.
In total, we rate MFC on eight distinct levels. To see MFC’s additional POWR Ratings for Growth, Value, Sentiment, Quality, and Stability, click here.
MET shares were trading at $70.15 per share on Friday afternoon, down $1.43 (-2.00%). Year-to-date, MET has gained 13.04%, versus a -9.40% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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