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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Aflac in Focus
Headquartered in Columbus, Aflac (AFL - Free Report) is a Finance stock that has seen a price change of 7.97% so far this year. The insurer is currently shelling out a dividend of $0.42 per share, with a dividend yield of 2.16%. This compares to the Insurance - Accident and Health industry's yield of 2.64% and the S&P 500's yield of 1.7%.
Looking at dividend growth, the company's current annualized dividend of $1.68 is up 5% from last year. Over the last 5 years, Aflac has increased its dividend 5 times on a year-over-year basis for an average annual increase of 12.36%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, Aflac's payout ratio is 30%, which means it paid out 30% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, AFL expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $6 per share, representing a year-over-year earnings growth rate of 12.57%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, AFL presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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Aflac (AFL) Could Be a Great Choice
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Aflac in Focus
Headquartered in Columbus, Aflac (AFL - Free Report) is a Finance stock that has seen a price change of 7.97% so far this year. The insurer is currently shelling out a dividend of $0.42 per share, with a dividend yield of 2.16%. This compares to the Insurance - Accident and Health industry's yield of 2.64% and the S&P 500's yield of 1.7%.
Looking at dividend growth, the company's current annualized dividend of $1.68 is up 5% from last year. Over the last 5 years, Aflac has increased its dividend 5 times on a year-over-year basis for an average annual increase of 12.36%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, Aflac's payout ratio is 30%, which means it paid out 30% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, AFL expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $6 per share, representing a year-over-year earnings growth rate of 12.57%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, AFL presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).