Q: I have owned MFC for a number of years and over this period the shares have done absolutely nothing other than the dividend despite general markets that have been quite positive over this period. If that is how the shares performed in good markets what might happen if or when markets weaken. I suspect shares could tank as they’re does not to be a lot of ‘love’ for the company shares. Would appreciate your analysis. Should shares be sold or continue to be held? Could you pleases provide rationale for your position. Thanks.
MFC shares are up 11% this year, well ahead of the overall market. But certainly over five years it has not been great. MFC still has an 'image problem'. It was one of the only Canadian financial large caps to cut its dividend during the financial crisis. It has since recovered all of that, and the dividend is higher than it was prior to the cut, but investors have a long memory. It is viewed as less conservative than some of its peers. With decent growth expected in 2023, and the sector benefiting from higher rates, we are comfortable with it today. Its issues are well-reflected in its 7X earnings valuation.