What are we looking for?
Sustainable dividends from Canadian insurers seizing global opportunities.
Intact Financial Corp.’s joint bid for British giant RSA Insurance Group PLC highlights the international growth Canadian firms are targeting.
Intact has partnered with Danish insurer Tryg A/S to mount the $12.3-billion takeover of RSA. While it will acquire RSA’s Canadian business and its British and international operations, Tryg plans to keep RSA’s operations in Sweden and Norway. The pair of buyers will jointly hold its Denmark business.
Beyond developed markets such as Europe and the United States, a growing middle class in Asia and other regions is also spurring growth for Canadian players.
Our search zeroed in on Canadian insurance companies with international prospects and paying a dividend. We then applied our TSI Dividend Sustainability Rating System. It 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 sufficient to cover dividend payments;
- One point if the company is a leader in its industry.
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; average sustainability, four to six points; and below average sustainability, one to three points.
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. The TSI Best ETFs for Canadian Investors is the latest. TSI Network is also affiliated with Successful Investor Wealth Management.
What we found
Our TSI Dividend Sustainability Rating System generated six stocks. Intact’s bid for RSA comes on the heels of its successful 2017 acquisition of U.S. specialty insurer OneBeacon Insurance Group. Great-West Lifeco Inc. continues to build on its 2013 purchase of Irish Life to keep expanding in Europe. Meanwhile, Power Corp. of Canada lets shareholders profit from its majority holding in Great-West Lifeco. Canada’s Manulife Financial Corp. and Sun Life Financial Inc. are expanding globally, especially in Asian markets. Fairfax Financial Holdings Ltd. also aims to grow internationally, citing its “strong foothold” in the insurance and reinsurance markets of Southeast Asia, Eastern Europe, the Middle East and Brazil.
We advise investors to do additional research on any investments we identify here.
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.