When considering long-term investments in the Canadian insurance sector, two giants often stand out: Great-West Lifeco (TSX:GWO) and Manulife Financial (TSX:MFC). Both have deep roots in financial services and insurance, a strong reputation for consistent dividend payments, and a reliable presence in global markets. But which one is a better buy for the long term? Let’s dive in.
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GWO stock
GWO stock has recently made headlines with its steady growth. As of November 8, 2024, GWO stock sits at around $46.84, up from $43.86 at the beginning of the year, signalling positive investor sentiment. This 6.8% increase reflects GWO stock’s commitment to growth across various geographies, including Canada, the United States, and Europe.
In its recent earnings report, Great-West posted earnings per share (EPS) of $3.98, positioning its price-to-earnings (P/E) ratio at 11.8. A figure that makes it relatively affordable compared to broader market averages. This lower P/E ratio could suggest that investors are receiving more value per dollar, a promising sign for those seeking stability and long-term value.
GWO stock’s dividend strategy is another compelling factor. The company offers a dividend yield of 4.8%, which ranks it among the top 25% of dividend-paying stocks in Canada. With a dividend payout ratio of 55.8%, GWO stock has a well-balanced approach to distributing earnings to shareholders. All while retaining enough capital to fuel future growth.
MFC stock
On the other hand, MFC has also been gaining attention, particularly for its strong operations in Asia. MFC reported robust growth in its Asian markets, a region that contributed significantly to its 40% increase in earnings during the second quarter of 2024. This success in Asia highlights MFC stock’s strategic focus on high-growth regions and 1potential to capture market share in some of the world’s fastest-growing economies. The focus on Asia gives Manulife a diversification advantage, potentially positioning it to weather economic fluctuations more effectively than other regionally focused insurers.
For growth-minded investors, MFC’s recent success in wealth and asset management is worth noting. In the third quarter of 2024, Manulife’s Wealth and Asset Management division saw net inflows of over $5 billion, marking positive inflows in 13 of the past 14 years. This trend underscores MFC stock’s strong foothold in the wealth management space. And this provides a steady revenue stream and diversification beyond traditional insurance products.
Future favourites
Looking to the future, both companies appear to have clear growth strategies. Great-West continues to strengthen its U.S. and Canadian segments, focusing on profitable expansion, especially through its Empower retirement services in the U.S. This strategic direction could ensure sustained growth in North American markets, although it may be less insulated against economic fluctuations in this region. MFC’s expansive operations in Asia, combined with its increasing use of technology to enhance customer service, positions it well for the digital age, potentially driving efficiency gains and deeper customer engagement.
Both Great-West Lifeco and Manulife Financial have distinct advantages, making each a compelling investment option. For dividend-focused investors seeking stability and a strong North American presence, Great-West Lifeco could be the better choice with its slightly higher dividend yield and strong insider support.
However, for those who prioritize growth and international diversification, especially with an eye on Asia’s expanding insurance and wealth management markets, Manulife might offer the edge. Ultimately, choosing between these two solid insurers depends on your investment priorities, whether you lean toward income stability or potential for global growth.
