Sun Life Stock: An Inexpensive Dividend Stock Worth Your Attention

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There are a lot of stocks on the TSX today that deserve the attention of investors. Virtually all stocks are down from 2022 highs, and that might not end anytime soon. However, there are few that really deserve your immediate attention. One of them is sun life Financial (TSX: SLF)(NYSE: SLF).

It is cheap

Sun Life shares are cheap right now in a number of ways. Of course, its shares are lower than they were earlier this year, down 17% year-to-date. But that mostly comes from the territory as an insurance, wealth management and asset management company. Yet in the case of Sun Life stocks, it has plenty of cash to cover debt and keep pace with dividend payments.

And the business is cheap in many ways. Currently, Sun Life shares are trading at a precious 8.88 times earnings. It would only take 30% of its equity to cover its total debts. And as mentioned, it is well below the 52-week highs and is currently trading below its 50-day moving average of the stock price.

Overall, Sun Life stocks are a solid company to consider. But it’s better.

Its dividend

Sun Life shares also offer a strong, stable and high dividend yield at 4.84%. That works out to $2.76 per share per year. Moreover, it has continued to grow. The cheap stock is currently offering investors a compound annual growth rate (CAGR) of 6.72% at the time of writing.

And let’s put the cheap stock into perspective here. Let’s say you bought $10,000 worth of Sun Life stock at its 52-week high of $74 per share. This would have given you dividends of about $368 per year. Yet if you buy today, that same investment would cost around $486! That’s a $122 difference in your pocket every year, no questions asked.

His growth

Now here’s the big part. It’s fine to invest in a business when you can expect short-term growth. But Motley Fool investors know that you should always invest in a business that you are prepared to own for the long term. In this case, Sun Life stock is still a great buy. It has been around for decades, increasing its dividend but also its stock price and business ventures.

Over the past 20 years, Sun Life shares have risen 368%. This amounts to a CAGR of 7.78% during this period. If we use this as a guideline, we can identify where certain similar stocks might be in 20 years based on the $10,000 investment. So, let’s look at that based on whether you bought it at 52-week highs or today’s prices.

In the former case, a $10,000 with dividends reinvested could be worth $88,773 at these higher levels. But today, if you were to buy at $10,000, I would factor in the downside. If you bought at $56 and saw it rally to $74, that would increase your shares to just $13,759. From there, back to historical performance. Two decades from now, you could have a portfolio worth $122,309!

At the end of the line

As the saying goes, it’s not about timing the market, it’s about time in the market. However, with Sun Life stocks, you could lock in both right now. You can get a cheap stock price that could see stocks rebound to 52-week highs over the next year. From there, you can expect strong future growth that could lead to an explosive portfolio.

About Jason Norton

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