Sun Life: A 4.4% Yield On Common Shares And 5.25% On Preferred Shares

Sun Life reported a weak Q1 on (unrealized) losses in its investment portfolio.
Hardly a surprise, and Q2 should see a lot of those losses being reversed.
The 4.4% dividend yield remains fully covered.
Preferred shares are now yielding 5.0-5.25% and could be another option for income-oriented investors.
Introduction
While looking for potential companies to invest my excess Canadian dollars in, I wanted to have a look at Sun Life (SLF) to see how this slightly smaller brother of Manulife Financial (MFC) performed in the first quarter. I recently discussed Manulife here.

Data by YCharts
As Sun Life's average daily volume on its NYSE listing is approximately 800,000 shares per day, there's no specific need to trade in the company's shares using the TSX listing. However, as Sun Life is reporting its financial results in Canadian dollars, I will use the CAD as base currency throughout this article. Where applicable, the per-share performance also will be based on the Canadian share price.
Sun Life: Q1 was disappointing, but the damage remained limited
The main task for insurance companies in the first quarter was to keep the realized and unrealized losses on the investment portfolio limited. We saw how Manulife saw its investment income decrease by approximately 50%, and I didn't expect Sun Life to do any better.

Source: Q1 results
Actually, Sun Life performed slightly worse than I had hoped for. Whereas the net premiums increased by almost 20%, the company's net investment income of almost C$5.8B in Q1 2019 was now overhauled into an investment loss of C$315M. This was predominantly caused by the change in fair value of assets (as the interest income actually increased in the first quarter). The Q1 performance of the investment portfolio was approximately C$6B lower compared to Q1 2019.
That being said, Sun Life was able to keep the damage limited: Its pre-tax income decreased by just over 15% from C$802M to C$665M.... Read more

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