We recently compiled a list of the 10 Dividend Stocks For Steady Income. In this article, we are going to take a look at where Manulife Financial Corporation (NYSE:MFC) stands against the other dividend stocks.

Generating income has consistently been a primary goal for investors. To achieve this, they often opt for investments that provide steady and reliable returns over time. Dividend stocks are particularly popular in this regard, as they are well-regarded for offering regular income. Although using cash payouts from a stock portfolio is a popular approach among individuals nearing retirement, building an equity income portfolio is an option available to anyone. Over the years, dividends have significantly enhanced investors’ overall returns, making these stocks a compelling choice for income-focused portfolios. In certain periods, especially when equity returns fell below 10%, dividends have accounted for more than half of the total returns of major market indices, according to LSEG data.

Investors are increasingly emphasizing the quality of a company’s earnings. Examining factors such as dividends per share, dividend growth, and the stability of dividend payments can provide valuable insights into a company’s financial stability. Those who prioritize businesses with lower debt levels and higher profitability often target well-established, financially robust firms with greater flexibility. These high-quality companies typically demonstrate stronger resilience during market downturns and are more likely to sustain earnings growth across different market conditions.

Also read: 8 Best Dividend Leaders to Buy According to Wall Street Analysts

According to a report by BlackRock, historically, stocks that consistently grew or maintained their dividends have delivered better performance compared to those that either did not pay dividends or reduced their payouts. During market downturns, dividend-paying stocks often provide a buffer against the volatility of share prices. Companies that issue dividends typically strive to maintain these payments and are generally reluctant to reduce them unless absolutely unavoidable.

When investing in dividend stocks, investors often evaluate the dividend yield. Experts recommend focusing on yields within the 3% to 6% range, as higher yields may indicate potential yield traps. Brian Bollinger, president of Simply Safe Dividends, has also emphasized this point. Here are some comments from the analyst:

“I generally like to advocate for an approach of targeting great businesses that might pay closer to a 3% to 4% dividend yield.”

He further mentioned that these companies tend to gradually increase their payouts, which can enhance annual income streams and help counter the impact of inflation. Regarding companies with lower yields, he noted that they are often associated with more secure businesses and more reliable dividend payments. For example, the Dividend Aristocrat Index, which monitors companies with at least 25 years of consistent dividend growth, has an indicated yield of 2.28%. According to Bollinger, many of the firms in this index are well-established and financially stable. He suggested that creating a diversified portfolio of these companies can provide reassurance, as it builds a solid foundation for a growing stream of passive income, regardless of market fluctuations. He further said:

“When stock prices fall, it’s so easy to panic, but dividend investing can overcome that because you’re just trying to stay focused on your income stream. You don’t care so much about the markets’ short-term ups and downs anymore.”

As a result, investors often include dividend stocks in their portfolios.

Our Methodology:

For this list, we first filtered dividend stocks that have shown at least 10 consecutive years of dividend growth. From this group, we selected those with dividend yields above 1.5% as of December 20. Lastly, we chose 10 companies that have achieved a share price return of over 30% over the past five years. The stocks are ranked in ascending order of their dividend yields as of December 20. We also considered hedge fund sentiment around each stock using Insider Monkey’s data for Q3 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).

Manulife Financial Corporation (NYSE:MFC)

Dividend Yield as of December 20: 3.79%

5-Year Share Price Return: 50.65%

Manulife Financial Corporation (NYSE:MFC) is a Canadian multinational insurance company that also offers a wide range of other financial services to its consumers. Despite global economic uncertainties, the company delivered a strong financial performance in 2024, driven by robust growth in new business and impressive results from its global wealth management segment, especially in Asia. The company’s solid stock performance this year may be attributed to its strategic emphasis on digital innovation and its expansion into high-growth markets. In Asia, Manulife has been actively broadening its product offerings and enhancing digital services to meet the needs of its expanding customer base. Recent initiatives include the launch of digital tools and mobile apps across major markets such as Vietnam, Indonesia, and the Philippines.

In the third quarter of 2024, Manulife Financial Corporation (NYSE:MFC) reported core earnings of $1.8 billion, which showed a 4% growth from the same period last year. Year-to-date, the company generated 70% of its core earnings from its highest-potential businesses, contributing to a 14% increase in core EPS, excluding the impact of GMT. A core ROE of 16.6% highlighted strong operational performance and disciplined capital allocation. The company maintained a focus on expense management, achieving an expense efficiency ratio of 45.0% year-to-date, aligning with its medium-term goal of remaining below 45%.

In addition to this, Manulife Financial Corporation (NYSE:MFC) remained committed to its shareholder obligation, returning over $2 billion to shareholders since the start of 2024. The company has a strong dividend history. It has raised its payouts for 11 consecutive years, which makes MFC one of the best stocks with steady dividends. The company offers a quarterly dividend of C$0.40 per share and has a dividend yield of 3.79%, as of December 20.

As per Insider Monkey’s database of Q3 2024, 22 hedge funds held stakes in Manulife Financial Corporation (NYSE:MFC), the same as in the previous quarter. These stakes are collectively valued at more than $395 million.

Overall MFC ranks 3rd on our list of the best stocks with steady dividends. While we acknowledge the potential of MFC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MFC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. 

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article is originally published at Insider Monkey.