After years of lackluster results, Manulife Financial Corp (TSX:MFC)(NYSE:MFC) shareholders are finally getting rewarded.
The life insurer first got a nice bump after Donald Trump was elected U.S. president. Shares are 21.8% higher in the last three months on expectations that Trump’s presidency will send interest rates higher. That news is good for all insurers, and Manulife in particular.
The good news continued on Thursday. Manulife reported solid fourth-quarter earnings marked by particularly strong results in Asia. That helped the company post an annual core operating profit of $4 billion, which has long been a target for management.
And most importantly for dividend investors, Manulife announced it’s hiking its quarterly dividend. The payout went up $0.02 per quarter, good enough for an 11% increase to $0.21 per share. The current yield is 3.4%.
2017 marks the fourth consecutive year Manulife has increased its dividend payment. In 2013, the company paid $0.13 per share each quarter, which means the payout has grown 61.5% in the last four years. That’s remarkable growth.
The payout ratio is rock solid, too. The new dividend will represent an annual commitment of $1.66 billion, or about 42% of 2016’s core earnings. This proves the company’s dividend is indeed on strong footing. Some investors are nervous about Manulife because it cut the dividend 50% in 2009, but that’s ancient history.
Manulife shares are off slightly in Thursday’s trading, down $0.18 each to $24.40. The company is only slightly below its 52-week high of $25.57.
