We received US$54.70 (127.4419 shares x 43 cents) from Aflac Incorporated (AFL). This is the 2nd consecutive dividend payment at 43 cents. We are expecting 2 more payments at 43 cents. Founded in 1955, Aflac Inc, a subsidiary of American Family Life Assuarance Company of Columnus, provides supplemental health and life insurance products. It operates in the US and Japan.
The dividend payout ratio is at 0.30. For the past 10 years, the dividend payout ratio is in between 0.20 to 0.40; it didn’t have much significant volatility in terms of dividend payout ratio except during post-2008 financial crisis. In the past 5 years, dividend payout ratio has been below 0.30 (which is good because dividend is stable). In general, the consistent low dividend payout ratio means that the company is committed to continue and to possibly increase future dividends; however, we need to be cautious about “ the % of increase” as it will be more evident on the next explanation.
AFL’s dividend yield posted at +2.3%. If we analyzed the historical trend, +2.3% has been consistent between +1.8% to +2.8% range for the past 7 years. The dividend yield is pretty much low but stable… and stable means that we are expecting a continuous stream of cash flows in the future. If we compare side by side the payout ratio and yield, the current numbers are within their ranges, therefore, we are comfortable to say that there is an increase in dividends payment in the futures and most likely the dividend growth might be the same.
Speaking of dividend growths… excluding the 10 yr growth rate, dividend growth rate is pretty much in +5% to +6% range, which is pretty much decent. We are expecting that growth rate in the near future will still be around +5% based on the trend in dividend yield and dividend payout ratio.
Aflac Inc (AFL) is a stable provider for dividends payments which makes our goal and investment strategy align with this dividend champion.