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What are we looking for?

Sustainable dividends from Canadian insurers seizing global opportunities.

The screen

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.

Select TSX-listed companies offering insurance products

Ranking*CompanyTickerDividend Sustainability RatingPointsDiv. Yld. (%)Mkt. Cap. ($ Bil.)1Y Ttl. Rtn. (%)Recent price ($)
1Great-West Lifeco Inc.GWO-TAbove Average95.628.9-6.231.05
2Manulife Financial Corp.MFC-TAbove Average95.043.8-14.722.23
3Sun Life Financial Inc.SLF-TAbove Average93.734.8-4.158.91
4Fairfax Financial HoldingsFFH-TAbove Average92.912.1-25.5446.12
5Power Corp. of CanadaPOW-TAbove Average85.920.5-6.030.02
6Intact Financial Corp.IFC-TAbove Average82.320.86.3144.85

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.

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

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