So, you're looking to double your Tax-Free Savings Account (TFSA) contribution room of $7,000? While you can't directly increase the contribution limit set by the Canadian government, you can aim to double your investment through savvy choices. One potential avenue is investing in Manulife Financial (TSX:MFC). Let's explore why MFC might be a solid option, considering its recent earnings, past performance, and future outlook.
Manulife stock
Manulife Financial, a leading international financial services group, has demonstrated robust financial health. In the third quarter of 2024, Manulife reported record core earnings and impressive insurance new business results. This strong performance indicates the company's resilience and growth potential, which are encouraging signs for investors.
The company's stock has shown a positive trajectory. As of writing, MFC's stock price stood at $45.90, reflecting a steady increase over the past year. This upward trend suggests that the company is on a solid growth path, which could benefit investors seeking to grow their TFSA investments.
More to come
Looking ahead, Manulife has set ambitious targets. The company aims to achieve a core return on equity (ROE) of over 18% by 2027, up from the 13% recorded in 2018 and over 15% in 2022. This goal reflects Manulife's commitment to enhancing profitability and delivering greater value to shareholders, indicating a promising future outlook.
Manulife's strategic focus on the Asian market has been a significant growth driver. In the second quarter of 2024, the company's earnings from Asia rose by 40%, underscoring the importance of this region in its overall growth strategy. This expansion into high-growth markets could provide additional momentum for the company's performance.
The company has also been proactive in capital management. Manulife expects to generate more than $22 billion in cash by 2027, focusing on cash generation in a higher interest-rate environment. This strategy enhances the company's financial flexibility and its ability to invest in growth opportunities, which could positively impact shareholder value.
Considerations
Leadership transitions can influence a company's direction. Manulife announced that Phil Witherington will succeed Roy Gori as chief executive officer in May 2025. Witherington's extensive experience in the insurance and financial services sectors is expected to provide continuity and strategic vision. This could be beneficial for the company's future performance.
What's more, in terms of dividends, Manulife has maintained a consistent payout, with a forward annual dividend rate of $1.60 and a yield of 3.50% at writing. This steady dividend income can be an attractive feature for investors seeking regular returns within their TFSA.
It's important to note that investing in stocks carries inherent risks, and past performance is not indicative of future results. However, Manulife's strong financials, strategic growth initiatives, and commitment to shareholder value present a compelling case for consideration.
Bottom line
By investing your TFSA contribution in a company like Manulife, you have the potential to achieve significant growth over time. While there's no guarantee of doubling your investment, the company's positive outlook and strategic direction could enhance the likelihood of substantial returns, especially given a dividend of 3.5% and returns up an incredible 71% in the last year alone at writing!
So, while you can't directly double your TFSA contribution room, making informed investment choices can help you maximize the growth of your contributions. Manulife Financial's recent performance and future plans make it a candidate worth considering for your TFSA portfolio.
