Smart Dividend Portfolio Edition #58: Assured Yield
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Dear Investor,
Welcome to the 58th edition of TipRanks’ Smart Dividend Portfolio & Newsletter.
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Market-Moving News: April 28, 2025
Stocks wrapped up their longest winning run since January, rising for four straight days. The S&P 500 (SPX) surged by 4.59%, increasing by nearly 11% from its April 8 low, which propelled it out of the correction territory. The Dow Jones Industrial Average (DJIA) ended the week with a gain of 2.48%, while the tech benchmark Nasdaq-100 (NDX) soared by 6.43%.
The week opened on a sour note as President Trump signaled a potential removal of Fed Chair Jerome Powell, raising worries about the central bank’s independence and the ability of monetary policies to withstand political pressure. Meanwhile, the U.S.-China trade tensions seemed to have reached a boiling point.
Markets rebounded on Tuesday and continued their climb through Friday, as Trump gave assurances that he has no intention of firing Powell, while media reports suggested a potential de-escalation in the China tariff standoff, supporting investor sentiment.
Later in the week, the sentiment was propelled by strong earnings and other positive news from tech leaders, whose strong showings significantly contributed to the overall market performance. The Magnificent Seven cohort surged by nearly 12% on the week, their best performance since January 2023.
Stocks briefly lost steam on Friday as Trump suggested another delay to reciprocal tariffs was unlikely, while also stating that China will have to come forward with a “substantial” offer to see its levies come down. However, U.S. equities wrapped up one of their best weeks of the past decades, with futures flashing green for this week’s opening.
Markets staged an impressive recovery last week, but another record high doesn’t appear within sight. On the one hand, a younger cohort of investors – whose only brush with the bear has been the pandemic-induced market slide – continue to provide a safety net for stocks, rushing in to buy every dip. Thus, according to Goldman Sachs data, investors have funneled $154 billion into U.S. equities so far this year, marking their best start of the year since 2001. These inflows came despite the tariff fears and the apparent weakening of the U.S. economy, both of which have contributed to nerve-wracking volatility throughout the stock market.
On the other hand, investors don’t seem to be convinced that stocks are out of the woods, massively selling rallies. Last week, the ETF that follows the Nasdaq-100 – Invesco QQQ Trust saw its worst investor-funds outflows since November 2024, signaling worries about the sustainability of the newborn rebound. The same pressures that have almost dragged stocks into a bear market – including tariff uncertainty and signs of an economic slowdown amid persistent inflation – continue to depress consumer and investor sentiment.
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This Week’s Quality Dividend Stock Idea
Sun Life Financial (SLF) is a Canadian financial services company specializing in life and health insurance, wealth management, and asset management solutions. Its operations span Canada, the United States, Asia, and other global markets, offering term life insurance, health and disability coverage, retirement and pension plans, mutual funds, and institutional investment management. With over $11 trillion in assets under management as of 2025, Sun Life is among the world’s most prominent life insurance and asset management groups, maintaining a significant presence in both individual and group markets globally.
1 – All financial data is in USD. The financial services’ shares trade on both the Toronto Stock Exchange and the NYSE under the ticker “SLF.”
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Century-Spanning Growth
Sun Life Financial, founded in 1865 as The Sun Insurance Company of Montreal by Matthew Hamilton Gault, has grown from a local life insurer into a global financial powerhouse. Initially focused on life insurance, Sun Life began its international journey in the late 19th century, expanding into the United States, the UK, Asia, and Latin America. In 1919, it pioneered group life insurance in Canada, setting a precedent for innovation. Throughout the 20th century, the company introduced diverse products, cementing its reputation for adaptability.
Post-World War II, Sun Life seized global opportunities, deepening its presence in Asia’s emerging markets. By the late 20th century, it diversified into wealth and asset management, building a robust platform that managed around $1 trillion in assets. This strategic shift toward capital-light, fee-based businesses accelerated in recent years, driving earnings through organic growth and acquisitions.
The 2023 acquisition of Dialogue Health Technologies bolstered its health ecosystem, while the launch of digital platforms like Sun Life Health 360 enhanced client engagement and access to virtual care. These initiatives reflect Sun Life’s focus on digital transformation, aligning with rising demand for integrated health and financial solutions.
Today, Sun Life Financial is one of the world’s largest life insurance and asset management companies, with an adjusted net income of approximately $2.8 billion and a market capitalization of nearly $34 billion.
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Acquisition Mode
Over the past few years, Sun Life Financial has strategically deployed approximately $4 billion toward mergers and acquisitions to build capabilities in high-growth, capital-light segments. These moves are part of the company’s long-term strategy to strengthen its presence in health, digital, and alternative asset management markets across North America and Asia.
In 2022, Sun Life completed the acquisition of DentaQuest, its second-largest deal to date. Now serving 35 million Americans, DentaQuest significantly advanced Sun Life’s ambition to become a leader in the U.S. health and benefits space, while boosting its fee-based earnings and returns on equity. That same year, Sun Life acquired a majority interest in Crescent Capital Group, a global alternative credit investment manager, which became a cornerstone of SLC Management’s alternative credit business.
In 2020, Sun Life took a majority stake in InfraRed Capital Partners, a global infrastructure and real assets investment manager. It completed the acquisition by buying the remaining 20% interest in 2024, expanding its alternative investment offerings and deepening its reach among North American investors.
In 2023, Sun Life made several transformative acquisitions. It increased its stake in Dialogue Health Technologies, a Canadian virtual care and telemedicine provider, from 23% to 95%, strengthening its digital health footprint. It also acquired a majority interest in Advisors Asset Management, gaining access to a broad U.S. high-net-worth client base and enhancing distribution for its asset management platform. Additionally, Sun Life expanded its digital insurance presence in Asia by increasing its investment in Bowtie, Hong Kong’s first virtual insurer.
Further optimizing its portfolio, Sun Life exited its U.K. insurance business in 2023 by executing a sale to Phoenix Group Holdings. However, it retained an economic interest in payout annuities and formed a strategic asset management partnership with Phoenix.
Looking ahead, Sun Life plans to complete minority stake buyouts in BGO (its real estate arm) and Crescent by early next year for a total of $1.5 billion. These buyouts are expected to lift earnings by 20% and support the company’s strategy to integrate these platforms into multi-asset solutions targeting ultra-high-net-worth clients and the rapidly growing wealth management markets in Asia.
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Global Pulse
Sun Life Financial operates a globally diversified business model spanning insurance, health solutions, and wealth and asset management. The company operates in 28 markets, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China, Australia, Singapore, Vietnam, Malaysia, and Bermuda, serving 85 million clients. SLF generates revenue through insurance premiums, investment income, and fee-based wealth and asset management services.
Since 2015, SLF has focused on expanding its wealth and asset management platforms, including acquisitions like Ryan Labs, and growing its footprint in high-growth Asian markets. This shift has increased return on equity and reduced reliance on traditional underwriting, which is traditionally more capital intensive.
Today, SLF’s asset management platform, managing over $1.3 trillion, generates stable, scalable fee-based revenue across mutual funds, institutional accounts, and alternative investments. Insurance operations in Canada, the U.S., and Asia continue to deliver steady premium income and risk-based earnings.
Asia has emerged as a key growth driver, with underlying net income up 17% in 2024, outpacing Canada. The region contributed significantly through expanded protection and wealth sales, rising assets under management, and joint ventures. In Q4 2024, individual protection earnings in Asia rose 26%, and wealth and asset management earnings surged 59%. Sales were fueled by demand from high-net-worth clients and expanded digital distribution and partnerships with banks.
In the U.S., the DentaQuest acquisition supports SLF’s goal of reaching US$100 million in annual earnings by 2025. Despite pandemic-related delays in Medicaid enrollments and costs, the company’s Medicaid portfolio, worth $2 billion, remains resilient, as it primarily covers children’s dental care and has minimal exposure to proposed 10% cuts in Medicaid, which will likely target adult coverage.
SLF’s growth strategy is rooted in digital transformation, client-centric innovation, and expansion in key markets. This includes developing highly rated mobile apps, innovative digital platforms like MPF Navigator in Hong Kong, and Clinical 360+ in the U.S., which provide personalized health and financial management tools. The company has launched platforms like Sun Life Health 360 and Clinical 360+ and invested in virtual care providers like Dialogue and Bowtie. These initiatives have boosted client engagement, supported earnings across health and protection segments, and reinforced its digital-first culture.
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Earnings Edge
Sun Life Financial is set to report its Q1 results on May 9, following steady performance over recent years. Over the past three years, SLF’s revenues and earnings have grown at a CAGR of 5.4% and 7.7%, respectively. This growth has been driven by its diversified protection and asset management portfolio, strategic acquisitions, and digital innovations enhancing client engagement and efficiency.
In Q4 2024, Sun Life Financial reported an adjusted EPS of $1.21, unchanged year-over-year, while full-year adjusted EPS grew 5% to $4.80. However, Q4’s reported net income of $170.7 million fell short of the adjusted net income of $524.3 million, impacted by unfavorable interest rates, a stronger U.S. dollar, and a $134 million impairment charge on intangible assets tied to banking agreements in Vietnam.
SLF’s business segments showed mixed performance in the fourth quarter. The Canadian segment delivered a record full-year underlying net income of $1.1 billion, up 6% year-over-year, fueled by strong fee income and insurance growth. While the Canadian economy shows signs of weakness, Sun Life sees these headwinds as manageable, thanks to its diversified group insurance portfolio, limiting exposure to vulnerable sectors like auto manufacturing.
In the U.S., Q4 net income fell 39% to $115 million due to severe stop-loss claims, leading to a 2024 loss ratio of 74%, up from 67% in 2023. Deferred cancer diagnoses, more premature births, and rising hospitalization costs drove the rise in loss ratio. This prompted a 14% pricing adjustment effective January 1, 2025 to offset these trends.
Sun Life’s asset management units saw mixed performance. The company’s asset management arm, SLC Management, achieved a record Q4 capital raise of $10.2 billion, though income dropped 16% to $59 million. MFS reported a 13% increase in Q4 net income to $216 million, despite a 6% sequential AUM decline to $606 billion due to net outflows of $20 billion and market depreciation.
The company is targeting adjusted EPS growth of 8% to 10%, a return on equity exceeding 18%, and a dividend payout ratio between 40% and 50% over the medium term. SLF plans to achieve these targets by expanding its fee-based wealth and asset management businesses, which now contribute nearly a third of total earnings, strengthening its distribution networks in Asia, advancing digital transformation, and enhancing health offerings.
As a part of its cost reduction strategy, the company achieved $59.1 million in savings in FY24, representing 40% of its $144.1 million cost-saving goal. SLF expects to reach 80% of this target by end-2025, supporting its digital and AI initiatives.
SLF incorporates its net Contractual Service Margin (CSM) in the debt-to-equity ratio to reflect future profits, resulting in a 20.1% ratio at FY24, in line with the industry average. CSM, which represents unearned profits embedded in insurance contracts, rose 13% year-over-year to $9.65 billion in Q4 2024, driven by organic business growth and favorable foreign exchange movements. This strong financial foundation is underscored by Sun Life’s robust credit ratings of “A+” from S&P and “A1” from Moody’s, highlighting its solid balance sheet and prudent risk management.
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Future Upside
Sun Life Financial has consistently demonstrated a strong commitment to shareholder returns, anchored by a decade of consecutive dividend growth averaging 8.8% annually. For Q1 2025, the company maintained its quarterly dividend at $0.60 per share, reflecting confidence in its earnings strength and cash flow stability. With a 49.5% underlying dividend payout ratio and a 4.1% yield, significantly above the financial sector average of 1.49%, SLF continues to offer an attractive income stream. Analysts forecast an 8.02% increase in dividends for the current fiscal year.
Complementing dividends, Sun Life is aggressively repurchasing shares, with 11.5 million shares already bought back year-to-date under its normal course issuer bid (NCIB) program. The company has also implemented a Dividend Reinvestment and Share Purchase Plan to further enhance shareholder value.
Beyond dividends, Sun Life actively returns capital through share repurchases. In August 2024, the company renewed its NCIB, authorizing the repurchase of up to 15 million shares by August 2025. Under its automatic repurchase plan, the company’s broker can buy shares during blackout periods. Repurchased shares are either cancelled or allocated to equity-based incentive plans.
Sun Life backs its shareholder-friendly strategy with robust financials. In FY24, its return on equity stood at 17.2%, ranking in the top 40% of the industry. Between 2014 and 2023, the company has returned $10 billion to shareholders. Its capital strength is evident in a LICAT2 ratio of 152%, well above regulatory requirements, ensuring resilience during financial stress. Book value per share rose 11% year-over-year to $29.26, supported by Q4 buybacks. With shares trading at nearly twice the book value, the market is pricing in SLF’s growth prospects and intangible assets. Book value per share represents the net asset value per share, reflecting what common shareholders would theoretically receive if the company’s assets were liquidated and all liabilities paid.
SLF stock has climbed 13.7% over the past year, supported by resilient U.S. operations and consistent performance. The stock is currently trading at a P/E of 12.2x, a 11.2% premium to the sector average. Additionally, analysts remain bullish, projecting a further 13.3% upside due to its winning track record and increased confidence in its ability to accelerate growth due to its capital-light and high-growth business model. Based on discounted cash flow models, SLF appears undervalued by about 60%, suggesting continued growth potential.
2 – The Life Insurance Capital Adequacy Test (LICAT) is a risk-based capital framework established by the Office of the Superintendent of Financial Institutions (OSFI) in Canada to assess the capital adequacy of federally regulated life insurers. It measures whether an insurer holds sufficient capital to withstand financial stress and protect policyholders and creditors, both during normal operations and in a wind-up scenario.
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Investing Takeaway
Sun Life Financial offers a compelling case for income-focused investors, underpinned by a decade of consistent dividend growth. With a moderate dividend payout ratio and ample liquidity, SLF has room for future hikes. SLF’s financial strength supports its capital return strategy. With DCF valuations indicating the stock is deeply undervalued, Sun Life presents both income and growth opportunities.
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Dividend Investor Portfolio
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Portfolio News
▣ ADP (ADP) is scheduled to report its fiscal third-quarter results on April 30. Analysts expect the company to post an EPS of $2.97, reflecting a 26.4% sequential increase, while revenue is projected to rise 10% quarter-over-quarter to $5.5 billion.
▣ Amgen (AMGN) is scheduled to report its first-quarter results on May 1. Analysts expect the pharmaceutical giant to post earnings of $4.27 per share, reflecting a 19.6% sequential decline, with revenue projected at $8.06 billion, down 11.4% from the prior quarter.
Separately, Amgen announced a $900 million expansion of its Ohio manufacturing facility, bringing its total investment in Central Ohio to over $1.4 billion and increasing job creation to 750. Since the 2017 Tax Cuts and Jobs Act, the company has invested nearly $5 billion in direct capital expenditures in the U.S., contributing approximately $12 billion to the economy. The Ohio expansion further strengthens Amgen’s global biomanufacturing network and follows a recent $1 billion investment in a new facility in Holly Springs, NC.
▣ ExxonMobil (XOM) is scheduled to report its first-quarter results on May 2. Analysts expect the company to post earnings of $1.74 per share, reflecting a 4.2% sequential increase, with revenue projected at $86.3 billion, representing a 6% quarter-over-quarter rise. In another development, XOM has successfully fended off an attempt by Occidental Petroleum to challenge its production rights at one of the largest lithium deposits in the U.S. The regulatory dispute, based in Arkansas, comes amid the Trump administration’s efforts to boost domestic extraction and processing of critical minerals. Despite Occidental’s objections, Exxon’s subsidiary, Saltwerx, was granted approval by regulators to establish a 56,000-acre lithium production unit.
▣ IBM (IBM) delivered strong first-quarter results, reporting earnings of $1.60 per share, surpassing analysts’ consensus estimate of $1.42. Revenue rose 1% year-over-year to $14.5 billion, slightly ahead of expectations of $14.39 billion. During the quarter, IBM returned $1.5 billion to shareholders through dividends and spent $7.1 billion on acquisitions, including the purchase of HashiCorp. Looking ahead, management expects at least 5% revenue growth on a constant currency basis, compared to analysts’ forecast of 3.5%, and projects approximately $13.5 billion in free cash flow for the full year.
▣ LyondellBasell (LYB) reported adjusted EPS of $0.33, a decline of 74.8% year-over-year, falling short of consensus estimates of $0.4 per share. The company’s sales declined by 7.5% year-over-year to $7.7 billion, exceeding estimates of $7.5 billion. LYB navigated challenging market conditions in the first quarter. The company strengthened its position by securing cost-advantaged feedstock in the Middle East and approving an expansion of U.S. propylene capacity. To offset macroeconomic headwinds, LYB launched a $500 million Cash Improvement Plan. In the second quarter, the company expects seasonal demand improvements, aided by lower U.S. feedstock costs and declining crude oil prices in Europe and Asia. Oxyfuels margins should benefit from higher gasoline crack spreads during the summer. Despite economic uncertainty, global packaging demand remains resilient. LYB expects second-quarter operating rates of 85% for North American olefins and polyolefins (O&P), 75% for European O&P, and 85% for Intermediates & Derivatives (I&D) assets.
▣ PepsiCo (PEP) reported adjusted earnings of $1.48 per share, slightly missing the consensus estimate of $1.49 and marking its first earnings miss in at least five years. Revenue declined 1.8% year-over-year to $17.92 billion but came in slightly above analyst expectations of $17.77 billion. Looking ahead to fiscal 2025, the company expects a low single-digit increase in organic revenue but anticipates a 3% year-over-year decline in core EPS from the fiscal 2024 level of $8.16. The subdued outlook reflects higher supply chain costs related to tariffs, elevated macroeconomic volatility, and cautious consumer spending. To address these challenges, PepsiCo is adjusting its sourcing strategies for key ingredients and accelerating productivity initiatives focused on optimizing the supply chain, improving transportation and logistics efficiency, and tightly managing operating costs.
▣ Philip Morris (PM) reported adjusted earnings of $1.69 per share for the quarter, up 12.7% year-over-year and ahead of the consensus estimate of $1.61. Revenue rose 5.8% year-over-year to $9.3 billion, also surpassing analyst expectations of $9.1 billion. The company’s smoke-free products continued to gain momentum, accounting for 42% of total net revenues, with shipment volumes rising 14.4% and revenue climbing 15% to $3.9 billion. Looking ahead to fiscal 2025, Philip Morris expects adjusted EPS of $7.33 at the midpoint, above consensus estimates of $7.24. For the second quarter, the company projects EPS of $1.83, slightly higher than analyst expectations of $1.80. Philip Morris does not anticipate any share buybacks in fiscal 2025.
▣ Qualcomm (QCOM) is scheduled to report its fiscal second-quarter results on April 30. Analysts expect the company to post earnings per share (EPS) of $2.81, representing a 17.6% sequential decline, with revenues of $10.6 billion representing a 9.1% sequential drop. These projections are in line with Qualcomm’s guidance.
▣ VICI Properties (VICI) is scheduled to report its first-quarter results on April 30. Analysts expect the real estate investment trust (REIT) to post adjusted Funds from Operations (AFFO) of $0.68 per diluted share, reflecting a 19.3% sequential increase, while revenue is projected to be $976 million, remaining flat compared to the prior quarter.
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Recent Trades
None at the moment, although we are considering adding a stock to our portfolio when the market conditions allow for an attractive entry point. Stay tuned.
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Portfolio Attributes
| Dividend Portfolio Yield |
Expected Dividend Growth | Expected Annual Income |
| 4.01% | +8.25% | $5,924.69 |
| Yield-on-Cost Adjusted, Weighted |
Average Analyst 12-Month Growth Outlook | 10K Per Stock at the Time of Purchase |
Current Portfolio
| Name | EX-Dividend Date | Payment Date | Yield on Cost | Annual DPS |
| Automatic Data Processing (ADP) | Jun 12, 2025 | Jul 01, 2025 | 2.46% | $6.16 |
| Allianz SE ADR (ALIZY) | May 09, 2025 | May 28, 2025 | 6.09% | $1.52 |
| Amgen (AMGN) | May 16, 2025 | Jun 09, 2025 | 3.27% | $9.52 |
| BlackRock (BLK) | Jun 09, 2025 | Jun 26, 2025 | 2.61% | $20.84 |
| Bank of Nova Scotia (BNS) | Jul 03, 2025 | Jul 29, 2025 | 5.98% | $2.97 |
| EOG Resources (EOG) | Jul 17, 2025 | Jul 31, 2025 | 3.06% | $3.90 |
| IBM (IBM) | May 09, 2025 | Jun 10, 2025 | 3.13% | $6.68 |
| JPMorgan Chase (JPM) | Jul 08, 2025 | Jul 31, 2025 | 3.2% | $5.60 |
| Kroger (KR) | May 15, 2025 | Jun 02, 2025 | 2.82% | $1.28 |
| LyondellBasell (LYB) | Jun 03, 2025 | Jun 10, 2025 | 5.62% | $5.36 |
| PepsiCo (PEP) | Jun 09, 2025 | Jun 26, 2025 | 3.64% | $5.44 |
| Philip Morris (PM) | Jun 23, 2025 | Jul 17, 2025 | 6.06% | $5.40 |
| Qualcomm (QCOM) | May 29, 2025 | Jun 26, 2025 | 2.36% | $3.56 |
| VICI Properties (VICI) | Jun 18, 2025 | Jul 03, 2025 | 5.22% | $1.73 |
| ExxonMobil (XOM) | May 14, 2025 | Jun 10, 2025 | 3.64% | $3.96 |
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Click here for more stock market analysis from TipRanks Macro & Markets research analyst Yulia Vaiman
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Disclaimer
The information contained in this article represents the views and opinions of the writer only, and not the views or opinions of TipRanks or its affiliates and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy, or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment, and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices, or performance.
