Is MetLife a Good Investment?

PHOTO CREDIT: MetLife

OVERVIEW

MetLife Incorporation is a company based in the United States. The company offers a wide range of insurance (vision, dental, accident, etc.) to consumers and companies around the world. The company also offers a wide variety of risk and capital management products to companies around the world as well. MetLife was founded in 1863.

Why You Should?

  1. MetLife has a long history of returning cash to shareholders through a series of dividend increases and stock buybacks. A stock buyback is when a company buys back its own stock which causes the stock price to move higher. This history of shareholder returns has benefited the company and investors.
  2. MetLife offers a wide range of products and services to its customers of all kinds (individuals, companies, etc.). From a wide range of insurance products to capital and wealth management services, the company is an insurance juggernaut. This diversification will help the company go through times of low demand for its products.
  3. The company is a great reopening play in an investor’s portfolio. As this pandemic comes to an end, consumers will purchase more large ticket items like cars and various kinds of properties. They will need to draw insurance for these things, something that will benefit MetLife. This will benefit investors in the company as well.

Why You Should Not?

  1. MetLife faces tough competition in the insurance industry. Some of these other companies include Prudential and AIG (two other large insurance companies in the United States). This competition might hurt the company and its investors in the future.
  2. The company’s operation results continue to face a lot of uncertainty during these times. For example, in the event of natural disasters, which are becoming more common, the company will have to pay out a lot of money to its customers for damages. This will hurt the company’s bottom line income. This will hurt the company and its investors in the short to mid-term.
  3. An example MetLife having to pay out large sums of money to its customers is this pandemic. COVID-19 caused a lot of damages to peoples lives and properties, something which MetLife provides insurance for. This hurt some aspects of the company’s financial and operating results.
  4. Inflation concerns might increase ncertainty around MetLife’s portfolio. If the Federal Reserve raises the interest rates (which seems more and more likely due to a fast-growing economy), MetLife might see the value of its investment portfolio decline due to this. This will hurt the company and its investors.

MY OPINION

I think that MetLife is a decent long-term investment due to its history of shareholder returns, a wide range of products and services, as well as its position as a good reopening play. However, tough competition, uncertainty around how much the company will need to pay out each year, negative impacts from the pandemic, as well as inflation concerns might hurt the company and its investors.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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