Aflac’s Slowing Dividend Growth

We’ve been so busy doing industry analysis for our Quantigence DGI portfolio that we failed to notice that on the first of June, Aflac (AFL) paid us a dividend of $45.18 (94 cents per share X 48.06 shares) which we promptly bought more AFL shares with. This dividend payment was the 4th time in a row we’ve received a dividend from AFL with no increase. Let’s take a look at AFL’s past dividend growth history:

AFLAC Dividend Growth History

From this data we can see that the last 5 dividend raises for AFL were as follows:

  • 2011: +6.70% (2 cents)
  • 2012: +6.06% (2 cents)
  • 2013: +5.71% (2 cents)
  • 2014: +5.40% (2 cents)
  • 2015: +5.13% (2 cents)

So we would then expect to see:

  • 2016 +4.88% (2 cents)

That’s not the worst raise we’ve ever received, but we’re curious about the dividend payment policy of diminishing growth. Let’s take a look to see if they could actually pay more based on the payout ratio:

AFL Payout Ratio

As we can see in the above chart, AFL has a very low payout ratio. They could be paying us a better raise every year but they aren’t. Why not? This could be a topic for an entire article but we were curious to see what AFL’s yield would look like over time if AFL remained stuck on their current  “give em two cents” dividend policy. Here’s what AFL’s yield-on-cost would like over time if the Company paid shareholders a 2 cent dividend raise every year for the next 10 years:


This would mean it would take us 6 years to get to a +3% yield and 10 years to get close to a +3.5% yield. We’re not exactly wowed by the prospect of waiting that long for our yield to grow but with such a low payout ratio, it’s hard to think that Aflac would let 10 years go by while giving shareholders the exact same number of pennies increase each and every year. Isn’t time we saw a raise more inline with the 10-year average of +12.4%?

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