Q: Sunlife Financial has had a nice increase (+20% since I last purchased). IS Sunlife generally a hold, ell or buy? The other financial I hold is Royal bank. Given decreasing in interest rates and potential impact on banks is it a good time to switch to a bank hold? Which may be the second choice if that is the case?
5i Research Answer:
We still see SLF as buyable. The declining rate environment will typically have a greater benefit towards banks (increased lending & capital market activity) while rising rates benefits insurers (higher yields on their cash). Nonetheless, SLF has been a steady dividend grower and payer and we think it is a top value/income name. We thin holing both makes sense from a diversification standpoint but there may be more near-term growth potential for RY.