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There are different ways to generate passive income now and for later. One way is to buy safe dividend stocks. Canadian Dividend Aristocrats are used to paying safe and often increasing dividends. If you need passive income now, you can choose high-yielding dividend stocks there. If you’re not in a rush to get passive income right away, you may be able to grow your money faster by choosing dividend-paying stocks that grow their dividends at a faster rate, although they may have yields of lower dividends.
In the financial services sector, the big Canadian banks often steal the show by offering secure passive income. However, the insurance industry has also paid strong dividends and is a good place to look for passive income.
Intact Financial has just increased its dividend again!
When the regulator, the Office of the Superintendent of Financial Institutions, eased restrictions on federally regulated financial institutions in November 2021, Intact Financial (TSX: IFC) increased its dividend by 9.6%. I thought that was a relatively small increase from Manulife (TSX:MFC)(NYSE:MFC) dividend increase of 17.9% and Sun Life 20% increase.
It turns out that Intact Financial was planning to surprise with another dividend hike. It appears to be resuming its usual dividend increase schedule by increasing its dividend by 9.9% this month. Including the November 2021 increase, the cumulative growth of the two dividend increases is 20.5%.
The new quarterly dividend of $1.00 per share equates to a yield of approximately 2.16% at the recent price of $185.24 per share. That may seem like a low return for a dividend-paying stock, but Intact Financial has a track record of outperforming its industry peers in terms of return on equity.
It has increased its dividend for 17 consecutive years. Its 10-year dividend growth rate is firmly established at 9.6%, well ahead of inflation. Therefore, Intact Financial is a good night’s sleep dividend stock that you can hold to increase your passive income in the future.
After the IFC released its fourth quarter and full year 2021 results on Feb. 8, five analysts raised their price target for the stock to an average target of $216.40 per share.
“We achieved organic growth in the mid-teens of net operating income per share, while RSA saw a 12% increase in the seven months following the closing of the transaction. The acquisition has clearly strengthened our leadership position in Canada, and we are focused on delivering outperformance in [the U.K. and international business].”
Charles Brindamour, CEO of Intact Financial in the Q4 2021 press release
It’s a rare occurrence to see Manulife outperform Sun Life recently. Aside from recent downgrades of Sun Life by analysts, which drove the stock down, Manulife clearly remains a cheap dividend stock offering an attractive dividend yield. At $27.89 per share at the time of writing, it trades at around 8.6 times earnings with an expected growth rate of around 9% per year and a return of 4.7%.
MFC data by YCharts
Manulife just reported full-year 2021 results on Feb. 9, with net profit up 20% to $7.1 billion, while core profit rose 26% in constant currency to $6. .5 billion dollars. Its basic earnings per share improved 18% to $3.25, translating into a sustainable payout ratio of approximately 36% in 2021. Additionally, its net inflows into wealth management and worldwide assets tripled to $27.9 billion.
Additionally, the life and health insurer should benefit from a growing middle class in China, as it generates about a third of its revenue from geography.
“We now operate in 52 cities in 15 provinces, providing access to over 60% of China’s population and representing over 70% of GDP.
Press release Q4 2021