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What are we looking for?

Sustainable dividends from Canadian insurers – both exposed to and sheltered from the volatile weather of climate change.

The screen

The hottest year on record and the increasing severity of natural disasters have stoked fears for an industry long favoured by dividend investors: property and casualty insurance (P&C).

Still, top Canadian P&C insurers Intact Financial Corp. and Fairfax Financial Holdings Ltd. are both well placed to offset increased claims through higher premiums and more stringent liability and coverage management. Moreover, several of our top recommendations on the life insurance side will skirt the danger of severe weather altogether. At the same time, they provide the same appealing dividends as P&C players.

From a list of Canadian insurers, we identified leaders with steady growth prospects that are well protected from rising and increasingly costly natural disasters. We then applied our TSI Dividend Sustainability Rating System, which awards points to a stock based on key factors:

  • one point for five years of continuous dividend payments – two points for more than five;
  • two points if it has raised the payment in the past five years;
  • one point for management’s commitment to dividends;
  • one point for operating in non-cyclical industries;
  • one point for limited exposure to foreign currency rates and freedom from political interference;
  • two points for a strong balance sheet, including manageable debt and adequate cash;
  • two points for a long-term record of positive earnings and cash flow to cover dividends;
  • one point if the company is an industry leader.

Companies with 10 to 12 points have the most secure dividends or the highest sustainability. Those with seven to nine points have above-average sustainability; four to six points, average sustainability; and one to three points, below-average sustainability.

More about TSI Network

TSI Network is the online home of The Successful Investor Inc., the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor, and the TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management.

What we found

Insurers with attractive dividends that can weather climate change

Ranking*CompanyTickerDiv. Sustain. RatingPointsDiv. Yld. (%)Mkt. Cap. ($ Bil.)1Y Ttl. Rtn. (%) Recent Price ($)
1Manulife Financial Corp.MFC-TAbove Average95.748.110.725.73
2Great-West Lifeco Inc.GWO-TAbove Average95.237.228.039.82
3Sun Life Financial Inc.SLF-TAbove Average94.440.817.368.63
4Intact Financial Corp.IFC-TAbove Average92.334.03.3193.49
5Fairfax Financial Holdings Ltd. FFH-TAbove Average91.226.363.41,080.00
6Power Corp. of CanadaPOW-TAbove Average85.525.010.238.11
7iA Financial Corp. Inc.IAG-TAbove Average83.49.428.489.89
8E-L Financial Corp. Ltd. ELF-TAbove Average81.63.315.8932.00

Source: Dividend Advisor. 

*Ranking is determined by TSI Dividend Sustainability Score. Where overall points are the same, analysts considered P/E, dividend yield and industry outlook to decide final placements.

Our TSI Dividend Sustainability Rating System generated eight stocks, five of them companies based in Toronto. Intact Financial IFC-T offers investors exposure to Canada’s largest provider of property and casualty insurance. Fairfax Financial Holdings FFH-T is primarily engaged in property and casualty insurance and reinsurance but also manages a large investment portfolio. Sun Life Financial Inc. SLF-T and Manulife Financial Corp. MFC-T are leading life insurance and wealth management firms with a strong presence in expanding Asian markets. E-L Financial Corp. Ltd. ELF-T provides a range of insurance products for individuals as well as groups. Winnipeg-headquartered Great-West Lifeco Inc. GWO-T is a leading life insurer in Canada, as well as in the U.S., U.K. and Europe. Quebec City-based iA Financial Corp. Inc. IAG-T offers life and health insurance for individuals but also groups. And finally, Montreal-headquartered Power Corporation of Canada POW-T is a holding company. Its primary investments are controlling stakes in Great-West Lifeco, as well as IGM Financial Inc. IGM is Canada’s largest independent mutual-fund provider. It also offers ETFs and wealth management services.

Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 22/04/24 10:14am EDT.

SymbolName% changeLast
MFC-T
Manulife Fin
+1.04%32.05
GWO-T
Great-West Lifeco Inc
+0.7%40.54
SLF-T
Sun Life Financial Inc
+0.63%70.74
IFC-T
Intact Financial Corp
+0.67%223.44
FFH-T
Fairfax Financial Holdings Ltd
-0.65%1503.98
POW-T
Power Corp of Canada Sv
+0.27%36.94
IAG-T
IA Financial Corp Inc
+1.36%83.4
ELF-T
E-L Financial
+1.76%1099.99

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