Written by Christopher Liu, Chartered Financial Analyst at The Motley Fool Canada
Royal Bank of Canada Capital Markets, through Nitin Babbar, global co-head of capital markets, said markets are in an ideal position for IPOs in 2021. Canada’s largest bank was the largest IPO manager in Canada last year with 17 issues. However, BMO Capital markets got a mandate Divinity Financial (TSX: DFY).
The $3.42 billion IPO of a property and loss insurance company was the largest in 2021. It was also the third largest in Canada in the past five years and one of the 10 largest in Canadian history.
Some market analysts remember paths Manulife Financial (TSX: MFC) (NYSE: MFC) and Sun Life Finance (TSX: SLF) (NYSE: SLF) before. However, with a successful initial public offering, Definity could become the largest insurance stock in 2022.
Two of Canada’s largest life insurers rewarded investors with dividend increases in November 2021. Manulife increased its quarterly dividend by 12%, while Sun Life boosted its payout by 20%.
Manulife boasts a proven track record of achieving incremental increases in profits. Besides the main operation in Canada, the $49.57 billion company is located in Asia and Europe. In the United States, the brand is John Hancock.
In the nine months ending September 30, 2021, management reported 22.73% and 19.45% growth in net income and core earnings, respectively, versus the same period in 2020. Impressive results.
Sun Life also had strong financial results in the first three quarters of 2021. Its net income rose 72.05% to $2.85 billion compared to the same period in 2020. Despite the impact of the pandemic on many of its markets, Sun Life President and CEO said , Kevin Strain The company continues to see positive momentum.
The $41.56 billion company is the leading insurance and asset management company. According to the management, Sun Life is the first Canadian organization to offer digital tools across all wealth and insurance service platforms. Like Manulife, Sun Life is located in the United States and Asia (Philippines and Singapore).
Manulife (+12.49%) and Sun Life (+28.59%) were earning investments in 2021, although the latter was the best performer. Price-wise, Manulife ($25.52) is cheaper than Sun Life ($70.92). Dividend-wise, Manulife is more generous at 5.17% versus 3.72%.
future insurance giant
Definity could switch or move to an insurance and financial services company like Manulife and Sun Life one day. On November 18, 2021, the day of the IPO, the company raised about $1.4 billion. As of January 7, 2021, the share price is $29.58 – 8.87% higher than its price on the first trading day. However, market analysts see a return of between 8.65% and 21.7% in 12 months.
The seventh largest provider of property and casualty insurance in Canada with a market share of 4.6%. Economic insurance, Sonnet insurance, family insurance, and pet insurance are the brand names that fall under the Divinity umbrella. Because of the significant investment in reshaping the business, management says it can build market-leading capabilities to become a digital leader in a large and growing market.
Income and growth investors
Manulife and Sun Life are two dividend stocks loved by income investors. While Definity pays no dividends, TSX’s largest IPO in 2021 could be one of the biggest growth stocks this year.
TSX’s biggest IPO in 2021 could be the No. 1 insurance stock this year that debuted at The Motley Fool Canada.
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Deceitful shareholder Christopher Liu has no position in any of the stocks mentioned. The Motley Fool does not have a position in any of the stocks mentioned.